We lower our TP by 3.5% but maintain a MARKET PERFORM rating with a +1.7% total return. We expect 6.3% growth in FY17 sales driven by 26.2% growth in radial tire sale volume on the back of capacity expansion and growing demand for radial tires. However, bias truck tire sales will see a slight drop of -1.1% YoY due to a further 4.0% reduction in ASP.
Management openly discussed plans for recently acquired businesses during today’s AGM. VLC consolidation will bolster FY17 EPS growth guidance of 184%, in line with our forecast. GTN’s preliminary Q1 2017 NPAT before MI reached VND35 billion (USD1.5 million, +268% vs Q1 2016), underpinned by the consolidation of VLC, whose Q1 2017 NPAT before MI rose 14%. West Ocean Investment (24.4% stake in GTN currently) was approved to raise its ownership to over 25% without a tender offering.
We raise our target price for GAS by 9.1% and upgrade from U-PF to M-PF as we boost the terminal growth rate to incorporate the potential value of a 25% stake in the White Lion phase 2 gas field. 2017’s EPS is flat due to retroactive profit in 2016, but core EPS is expected to grow by 28.4% with a recovery in oil prices and a higher tariff for Thien Ung-Dai Hung gas field.
Management provided no color on soymilk segment. There was also no Q&A session. Ultra-conservative FY17 NPAT target of only VND184 billion (USD8 million, -89% vs FY16), which may be surpassed after one quarter. The remaining cash dividend of VND1,000/share for FY16 will be paid in Q2 2017. A 10:3 bonus share issuance will also be carried out in Q2 2017. FY17 ESOP plan: 1-3% ESOP if QNS delivers at least 10% growth in NPAT plus depreciation.
We issue a MARKET PERFORM rating for VCB with 8.3% total return. The stock is trading close to its fair value, but we are positive on its fundamentals and strong profit growth outlook. Expected 40.1% 2017 NPAT growth is driven by high loan growth, higher NIM and a drop in provision expense as VCB completed VAMC provisioning last year. 2018 NPAT growth will normalize to 22.4% as we expect similar loan growth and provision expense as in 2017 and a 9 bps increase in NIM.
We increase our target price 5.0% but maintain M-PF recommendation with 2.9% total return. We forecast a small loss in 2017 because of a lower TAD utilization rate and lower jack-up day rates despite significant improvement in jack-up utilization rates. Earnings will recover sharply in 2018 on the back of a recovery in day rates as well as drilling demand for major gas field projects, such as Red Emperor, Block B and White Lion.
We downgrade NLG’s rating from O-PF to M-PF with total return of +8.3%. We raise our TP 15% on higher-than-expected 2016 sales contract value, but the shares have rallied 20% YTD. New launches on the west side of Ho Chi Minh City will drive contract sales value up 53% in 2017. Strong pre-sales and a 50% stake transfer of the Nguyen Son project fuel 38% 2017F EPS growth. With increasing competitive headwinds, NLG is fairly valued with 2017F P/B at 1.3x.
We upgrade the rating for MBB to OUTPERFORM with total stock return of 14.7%. We raise our TP 17% on a 40 bps increase of forecast NIM level. 18.5% NPAT growth in 2017 is driven by 20.9% loan growth, an 11 bps increase of NIM and only a slight increase in provision expense. Growth momentum will be sustainable in 2018 with NPAT growth forecast at 17.1%. At the current price, MBB is trading at 2016 P/B and 2017 forward P/B of 1.0x. Given a high growth outlook and a well-managed loan
We upgrade our rating for GTN from SELL to MARKET PERFORM. While our fundamental views and target price for GTN remain unchanged, following our update report dated March 9, 2017, GTN’s share price has slid by 24% to what we feel is a more reasonable valuation.
We recommend investors accumulate shares of AAA, the largest plastic packaging manufacturer in Vietnam, over the next three to six months due to a strong profit growth outlook. Expansion in US and Japan markets will boost revenue in 2017. We forecast 35.6% sales growth in 2017 based on company guidance, while management targets sales volume to grow 52.8% to reach 70,800 tons.