We attended HSG’s AGM for the 2017 financial year on January 6, 2017. FY17 guidance of 29% revenue growth and 10% NPAT growth is in line with our forecast. Shareholders approved the FY16 dividend plan, ESOP plan, a new reward scheme for BOD, supervisory board, management team, and the new corporate structure model. HSG is rated MARKET PERFORM due to its 17% rally in price since our initiation. We are looking forward to full disclosure of Q1 FY17 results to revise our forecast.
Vietnam National Textile and Garment Group (Vinatex) listed on the UPCoM on Tuesday, January 3, 2017. Listing volume is 500 million shares. The company will trade under the ticker VGT with a listing price of VND13,500/share. Total market capitalization is expected to touch approximately VND6.75 trillion (USD296 million). TTM 2016 fully diluted EPS is VND1,180, making the listing price equivalent to a TTM 2016 PER of 11.4x.
Vietnam’s national airline Vietnam Airlines (HVN) was listed on UPCoM today. The listing reference price on the first trading day was VND28,000 per share, which implies a market cap of USD1.5 billion based on the 1,227,533,778 shares outstanding.
We initiate VSC with a BUY RATING and +35.6% total return. 12.4% expected drop in 2016 EPS is due to a surge in reefer container revenue in 2015. We expect 33.1% sales growth and 36.2% EPS growth in 2017, driven by the rising capacity utilization of VIP Green port, the second berth of which is currently being commissioned. Hai Phong ports will continue to ride the boom in FDI disbursements into the area.
Novaland will list its shares on the Ho Chi Minh Stock Exchange on December 28, 2016. We initiate with an OUTPERFORM rating with 19.8% total return. 25% market share in HCMC mid-range to high-end residential segment. 2017F NPAT growth of 84% Y-o-Y is bolstered by 2014-2016 locked up pre-sales. Encouraging sales progress at upscale projects hike 2017F gross profit margin by 16.2 ppt.
We increase our target price for PPC by 29.1% following our recent meeting with management. Long-term contracted volume for Pha Lai 1 (PL1) will be much higher than we had expected and we have less concern on PPC’s upgrade capex. 2016’s recurring EPS is projected to fall 51.1% YoY compared to a 41.3% YoY drop estimated previously due to less retroactive profit from Pha Lai 1. We estimate 2017’s recurring EPS will increase 49.7% YoY off 2016’s low base.
We resume our coverage on TLG with an OUTPERFORM rating and +11.0% Total Return. Solid FY16 and FY17 sales growth of 17% and 18%, driven by office supplies and exports.Weak input prices helped drive robust FY16 NPAT growth of 27% while conservative FY17 GPM assumption due to possible hike in oil prices still points to +14% NPAT growth in FY17. Demanding 15.9x FY17 PER reflects stable growth prospects and exceptionally solid fundamentals compared to peers.
We recently attended PCG’s management meeting in Hanoi. PCG’s LPG gas distribution system is a clean and effective means of reducing air pollution as natural gas, when combusted, has almost zero emissions of sulfur dioxide and nitrogen oxides (two of the primary components of city smog). With efficient marketing of their services, the potential exists for expanding business.
We expect low profit growth during 2016-2020. Although SSI has a low risk of profit downside, we do not think there is high chance that the company will generate a significant increase in profit either. In the coming years, we see that investment yield is likely to be lower while margin from the brokerage segment might be thinner. However, ROE can be kept at a constant rate of 12.5%-13.0% thanks to the larger scale of the market.
We slightly lower our target price by 0.5% due to a higher deposit growth forecast for 2017 and 2018. We issue an OUTPERFORM rating despite the lower TP due to recent price declines. Projected 11.8% NPAT growth in FY16 is driven mainly by 29.9% decline of provision expense. Modest 4.3% 2017 NPAT growth as NIM is forecast to reduce by 15.5 bps because of higher deposit growth and continued maturity of high yield government bonds.