Research Center

QNS is the domination of the soymilk market and also holds the second-largest sugar factory in Vietnam. With dominant market share, soymilk segment supplies a cash cow, while we anticipate that QNS's sugar production will be maintained at a high level, ensuring good selling prices and strong profit margins for QNS in the years ahead due to anti-dumping duties. We initiate our coverage on Quang Ngai Sugar (QNS VN) with a BUY rating and target price of VND65,900, implying a 33.0% upside by using a DCF (50%) and PE (50%) methodology.

Despite a flattish 2Q23 revenue growth of -3.4%yoy (VND39.9tn), earnings growth rattled by 41.5% yoy due to the interest burden coupled with an unfavorable comparison base. Gross profit reduced to VND4.9tn (-15.5%yoy). Costly material thinned industry gross margins, particularly for residential contractors. In contrast, infrastructure builders with BOT projects sustained healthier gross margins. Contractors were weighted by surging interest expense including C4G (+95 % yoy interest expense growth in 2Q23), PC1 (+59% yoy), TCD (+67% yoy).

According to the GSO estimate, in Aug, the total agriculture export value slightly increased to USD2bn (-4% mom, +24% yoy). Rice export value surged by 79% mom and 89% yoy to USD583mn. Rice export volume sharply increased by 67% mom and 54% yoy to 1mn tonnes. Vegetable export value was USD410mn (-25% mom, +69% yoy), and it accounted for 21% of total agriculture export turnover (+5.5%p yoy).

We initiate our coverage on TCB with a BUY rating and a target price of VND43,700, implying a 30% upside buy using a residual approach (50%) and P/B method (50%). TTM PB is at trough of 0.7x and we believe it is worth of trading at 1.1x PB driven by earnings turnaround in 2024-25F. TCB growth is taking a breath, made worse by the corporate bond crisis and real estate market stagnation. Against the odds, we believe it is just a temporary period of trouble.

To fulfill the urge of the Prime Minister in minister meetings, the SBV rewards the attendees with the amendment cited in Circular 10/2023 on late 23 Aug. By suspending three sub-articles 8,9,10, the SBV removes the metaphorical meaning and exposes the lenders to more discretion in setting the disbursement terms and conditions. We expect Circular 10 could facilitate the loan growth to real estate sectors and benefit the developers and homebuyers.

PNJ’s Jul net revenue surged by 8.5% mom to VND2.4tn in July 23, -5.8% yoy compared to June performance (-17.1% yoy). Gold 24K gained the spotlight with a VND5.7tn, +1.2% yoy, 30.4% of total sales. - The Jul result rewarded 7M23 NPAT growth with a 0.4% yoy (VND1.2tn, completing 60.4% of annual guidance) vs -0.5% yoy in 6M23.

2Q23 PBT surged +75%yoy (to VND1,577bn) thanks to strong income growth from non-NII (+331%yoy), low OPEX (-15.3%yoy) and a constant provision expense (+1%yoy). Meanwhile, NII kept a moderate growth rate of 7% with stable NIM. 2Q23 NPL (2-5 group) and NPL (3-5 group) fell to 6.2% (vs. 1Q23’s 7.4% and 4Q22’s 4.8%) and 3.2% (vs. 1Q23’s 3.3% and 4Q22’s 2.2%) respectively.

The Government approved a range of social programs and public investment to revitalize economic growth in 2022. In light of the strong demand for construction materials in 2024F, we recommend BUY on crushed stone stocks, namely DHA, and VLB. We rate BUY on HHV, CTD as direct and indirect beneficiaries from public spending theme.

On Aug 11th, we tuned in to MWG’s AM presenting the 1H23 performance. In 1H23, MWG reported net revenue of VND56.6tn (-20.1% yoy) and NPAT of VND38.7bn (-98% yoy), fulfilling 42%/1% of the year guidance. TGDD’s revenue slid to VND13.3tn (-29.4% yoy), while DMX’s revenue also fell to VND28.2tn (-25.9% yoy). BHX’s revenue thrived to VND7.3tn (+7.85% yoy, +14.5% qoq) in 2Q23, accumulating to 1H23 VND13.7tn (+6.8% yoy).