We upgrade NKG to MARKET PERFORM from UNDERPERFORM while trimming our target price by 6% to VND5,900/share as the share price has dropped by 14% over the last three months. We revise down our 2019 NPAT-MI forecast by 90% to VND13bn (USD0.6mn, -77% YoY) due to a huge loss in Q1 2019, prompting our cut in gross margin. We continue to include an estimated VND203bn (USD8.8bn) in one-off pre-tax gains from asset liquidations into our 2019 earnings forecast.
We reiterate our BUY rating for TLG while trimming our target price 9% to VND73,000 as we cut our 2019F NPAT-MI by 2% and apply a higher WACC. We maintain our 2019F revenue forecast of VND3.3tn (USD144.0mn, +16% YoY). While an early Tet holiday caused lower-than-expected domestic sales during most of Q1 2019, we believe domestic sales have started to pick up in March ahead of the back-to-school season.
We upgrade QNS to OUTPERFORM despite trimming our TP by 4% as the share price has dropped 12% in the past three months. We believe QNS offers good value at the current valuation given our projected FCF yields of 11%-22% during 2019F-2021 and improving soymilk sales. The cut in our TP is mostly due to a lower biomass valuation and a smaller net cash balance.
We maintain a BUY rating and raise our target price by 12.7% to VND31,000/share, mainly due to the cancellation of machinery and environment upgrade projects (capex of VND4.7tn/USD204mn) and higher terminal growth rate due to the expected Pha Lai 3 plant. We raise our cash dividend assumption for 2019-2023 from VND2,500/share (9.0% yield) to VND3,000/share (10.8% yield) given a higher available cash after removing the above projects.
We reiterate an OUTPERFORM rating. We expect Masan’s F&B business to maintain double-digit top-line growth thanks to intense product launching, while its foray into chilled pork has received positive consumer reception, paving the way for a stronger penetration going forward. We trim 2019F/2020F/2021F NPAT-MI by 9%/5%/2% due to weaker animal feed and copper sales projections for 2019 and lower earnings forecasts for Techcombank (TCB).
We reiterate our SELL recommendation owing to GTN’s sluggish efforts to turn around its dairy (Moc Chau Milk/MCM) and tea (Vinatea) businesses, coupled with demanding valuations with a pro-forma 2019F PER of 53.1x (adding back goodwill amortization related to past M&A). Our TP is below VNM’s ongoing tender offer price of VND13,000 for GTN, which, in our view, bakes in a strategic premium for potential synergies and the VNM’s opportunity to consolidate the market, assuming that VNM could even.
We reduce our target price by 0.6% to VND16,000; however, we downgrade BSR from BUY to OUTPERFORM as its share price has increased by 16.7% since January, leaving a lower upside. We increase our 2019 earnings forecast by 1.4% as we raise our projected diesel (DO) spread by 4%. An explicit signal of NPAT recovery in Q1 2019 (VND600bn/USD26mn vs a loss of VND1tn/USD43mn in Q4 2018) affirms a brighter 2019 earnings outlook.
We upgrade our rating on KBC to BUY from OUTPERFORM as we revise up our target price (TP) 4.4% to VND16,700, implying a projected TSR of 26.4%. Our target price revision mainly reflects accelerated Quang Chau (QC) industrial park (IP) and Trang Due (TD) urban area (UA) land sales. This is partly offset by an increase in our SG&A/sales assumption to 14% from 11% for our forecast period.
We upgrade our rating to MARKET PERFORM as we raise our TP by 7%, although we keep our earnings forecasts largely unchanged. Our TP increases as we lower our DCF beta from 0.8 to 0.7, which is consistent with VNM’s five-year average beta as well as the peer median, partly offset by a 30-bp hike to our risk-free rate. VNM continues to spearhead Vietnam’s growing dairy consumption.
We attended GMD’s AGM on May 16, 2018, in Ho Chi Minh City. For 2019, management guided for broadly flat revenue growth of 3% YoY to VND2.8tn (USD122mn; 6% below our forecast) but strong core PBT growth of 15% YoY to VND695bn (USD30mn; 19% above our forecast). We believe the gap between management’s guided 2019 core PBT and our forecast is mainly because the construction of Phase 2 of Nam Dinh Vu (NDV) port in Hai Phong will likely begin later in 2019 vs our previous assumption of H1 2019.