Morning financial news on 15/6/2023

REE’s subsidiary continuously sold PPC shares of Pha Lai Thermal Power

REE Energy Co., Ltd. has just sold 1,301,000 PPC shares out of the total registered 3,200,000 shares, equivalent to a successful selling rate of 40.7% of the total registered volume. The transaction was made from May 11 to June 8.

After the transaction, REE Energy Co., Ltd reduced its ownership from 24.14% to 23.73% of charter capital in Pha Lai Thermal Power. In addition, from June 15 to July 13, REE Energy Co., Ltd. registered to sell another 2 million PPC shares to reduce its ownership from 23.73% to 23.11% of charter capital.

REE Energy Company Limited is a member company of Refrigeration Mechanical and Electrical Joint Stock Company (HoSE: REE). As of March 31, 2023, Refrigeration M&E owned 100% of capital in REE Energy Co., Ltd. and recorded an investment in a subsidiary with an investment value of VND 6,349.5 billion.

In addition, M&E is also recording an investment of VND 1,234.6 billion in Pha Lai Thermal Power Joint Stock Company, which holds 24.14% of the charter capital, respectively.

Previously, at the 2022 Annual General Meeting of Shareholders, Mr. Huynh Thanh Hai, General Director of Refrigeration and Electrical Engineering said, because of the orientation of renewable energy investment, the corporation plans to divest from thermal power and electricity. there is a roadmap to sell capital of Pha Lai Thermal Power.

Regarding business activities, in the first quarter of 2023, Pha Lai Thermal Power recorded a revenue of VND 1,310.59 billion, up 21.6% over the same period and pre-tax profit recorded VND 39.89 billion, down 53.6% over the same period. In which, gross profit margin dropped sharply from 3.9% to only 1.8%.

During the period, gross profit decreased by 44.5% over the same period, corresponding to a decrease of 18.6 billion dong, to 23.24 billion dong; financial revenue decreased by 40.7%, equivalent to 27.84 billion dong, to 40.61 billion dong; General and administrative expenses decreased by 5.1%, equivalent to 1.26 billion dong, to 23.39 billion dong and other activities did not change significantly.

It is known that in 2023, Pha Lai Thermal Power sets a business plan with a revenue of VND 5,948.97 billion and an expected profit before tax of VND 266.61 billion. Thus, by the end of the first quarter of 2023, the Company completed 15% of the plan.

Severe decline in the US and China, Vinh Hoan faces a series of continuous declines

Vinh Hoan Joint Stock Company (HoSE: VHC) continued to record declining business results in May 2023, in most major markets such as the US, China and Europe.

Specifically, in May 2023, VHC recorded a total revenue of 954 billion VND, down 37% compared to the same period last year. In which, US market revenue recorded VND 373 billion, down 54% over the same period; revenue from the Chinese market recorded VND 93 billion, down 30% over the same period; European market revenue recorded VND 142 billion, down 27% over the same period; Vietnam market revenue recorded VND 224 billion, down 12% over the same period; and revenue from other markets recorded VND 122 billion, up 7% over the same period.

In terms of revenue structure by product, the main product of pangasius recorded a revenue of VND 592 billion, down 43% compared to the same period last year.

Previously, VHC announced the first quarter financial report, recording revenue of VND 2,200 billion, down 32% over the same period. The decline in sales was mainly due to a 32% decrease in sales of frozen pangasius fillets and other products over the same period, as well as a 19% decrease in C&G sales. VHC’s net profit decreased by 60% year-on-year in the first quarter of 2023 to VND219 billion.

Rong Viet Securities Company (VDSC) believes that the recovery in business results of VHC will lead to the recovery of orders from the US market. Although seafood retail in the US market still has negative growth, it has gradually recovered from the low of the second half of 2022. Notably, white fish (catfish, cod, tilapia) has Better recovery than other commodities due to reasonable prices amid consumer austerity.

In addition, VDSC estimates that the high inventory of pangasius at US retailers in the first half of 2022 will take 2-3 quarters to sell out. Since this inventory is likely to be exhausted, it is very likely that new import demand will return from the third quarter of 2023.

Combining 2 factors that US market recovered from the bottom and orders recovered from the Chinese market after reopening, VDSC predicts that VHC’s profit growth recovery will fall in the second half of the year. 2023.

Overall, in 2023, VDSC forecasts that VHC’s net revenue and profit after tax will reach VND 10.6 trillion (down 20% y/y) and VND 1.3 trillion (down 34% y/y) respectively. with the same period).

Recommended stocks today June 15: PLX, STB and TPB

Based on the above factors and recent developments, SSI moves its valuation base to mid-2024 and raises its 1-year target price for TPB stock to 24,300 dong/share (from 22,800 dong). This equates to a target P/B of 1.0x.

Recommended stocks today June 15: PLX, STB and TPB.

PLX: VNDirect recommends positive, target price 45,600 dong/share

The revenue of the first quarter of 2023 of the Vietnam National Petroleum Group (Petrolimex, HoSE: PLX) went flat over the same period, reaching VND 67,432 billion (up 0.6% over the same period). However, the gross profit in the first quarter of 2023 increased sharply by 28.1% over the same period to VND3,559 billion thanks to stable domestic supply when Nghi Son refinery operated at full capacity, helping PLX minimizes unexpected expenses related to the increase in imported goods as in the first quarter of 2022.

In the first quarter of 2023, selling expenses increased by 22.2% y/y to VND2,808 billion due to higher staff costs (up 27% y/y) and a 520% ​​increase in net financial profit compared to the same period last year. same period to 131 billion dong mainly thanks to higher exchange rate interest. As a result, PLX recorded a net profit in the first quarter of 2023 of VND 620 billion, up 154.7% over the same period and fulfilling 17% of VNDirect’s full-year forecast.

On April 7, PLX auctioned all 120 million shares of PGBank (PGB), equivalent to 40% of the bank’s total shares, at the price of VND21,400/share. The successful deal means that PLX has completely divested from PGB and collected 2,568 billion VND. VNDirect estimates that PLX recorded approximately VND 680 billion in financial revenue in the second quarter of 2023, equivalent to about 14% of PLX’s pre-tax profit in 2023.

This securities company also expects PLX to recover strongly from 2023-2025 with a compound growth in net profit of 46.1% thanks to: the domestic petroleum market stabilizes again from 2023 thanks to the operation of Nghi Son refinery at full capacity and the timely and adequate adjustment of petrol and oil business surcharges by the management agency, helping to limit the sudden gasoline business costs as incurred in 2022, and total gasoline consumption volume achieves a compound growth rate of 3% in 2023-2025.

VNDirect slightly increased its EPS forecast for 2023 to 2.4%, but lowered PLX’s EPS forecast for 2024-2025 to 4.4%/4.2% due to: increasing financial profit in 2023 thanks to profit from trading PGB divestment and reduced profit forecast from joint ventures in 2023-25 ​​due to PGB’s no longer contributing since Q2/2023.

Accordingly, VNDirect’s DCF target price remains unchanged at VND 45,600/share. The securities company also maintains a positive recommendation for PLX. The driving force for the price increase is higher-than-expected gasoline consumption. The downside risk mainly comes from the disruption of domestic petroleum supply due to a possible incident at Nghi Son oil refinery.

STB: SSI from positive to buy, 1-year target price is 34,500 dong/share

Following the boom in the previous quarters, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank, HoSE: STB) achieved pre-tax profit of nearly VND2.4 trillion (up 50% y/y), thanks to interest income Net (NII) increased by 113% YoY in the first quarter of 2023 despite weak credit growth (+2.2% YoY). NIM increased to 4.38% (up 210 basis points over the same period).

However, the business results in the first quarter of other activities were less satisfactory, including fee income (down 57.1% yoy), income from foreign exchange business (down 13.3% y/y). over the same period) and other income (down 94.6% over the same period). Bad debt increased (up 24.2 compared to the beginning of the year), pushing the bad debt ratio to 1.19% in the first quarter of 2023. However, this increase is still lower than that of other private banks and SSI Securities believes that STB’s bad debt ratio is still under control.

According to SSI’s assessment, what makes STB different from other private banks is the 23% decrease in debt ratio compared to the beginning of the year (equivalent to 1.26 trillion dong). However, bad debt increased 24.2% year-on-year to VND5.3 trillion, causing the bad debt ratio to rise to 1.19% from 0.98% in the fourth quarter of 2022. Although bad debt increased sharply, the bank did not make corresponding provision in the first quarter of 2023.

SSI believes that the negative impact from the increase in deposit rates in the fourth quarter of 2022 will still affect STB’s cost of capital (but not as much as in the first quarter of 2023). Lending interest rates may decrease after the SBV cuts the operating interest rates and this is expected to stimulate credit demand in the near future.

SSI estimates that 76.6% of total customer deposits in the fourth quarter of 2022 will be revalued in the second half of 2023 at a lower interest rate. Therefore, this securities company believes that STB’s NIM will remain stable in the second half of 2023.

In 2023, SSI revised down STB’s pre-tax profit estimate by 9.2% to VND9.5 trillion (+50% y/y) compared to the previous estimate.

After making all provision for VAMC (8.6 trillion dong in 2022 and 6.9 trillion dong in 2023), SSI expects STB’s EBT to reach 16 trillion dong (+68.3% y/y) over the same period), driven by NII and NFI growth of 14.1% and 8% y/y respectively in 2024.

The Company did not provide any estimates of the possible extraordinary returns associated with the transfer of these shares into the valuation model, and moved the valuation basis to mid-2024 and issued a 1-year target price is VND 34,500/share (from VND 29,000/share), due to the application of a target P/B of 1.3x (up from 1.2x). SSI also raised its recommendation for STB stock from positive to buy.

TPB: SSI recommends neutral, 1-year target price 24,300 dong/share

In the first quarter of 2023, despite good credit growth (5.8% y/y), net fee income (NFI) growth was high (36.1% y/y) and provision expenses down (-58.3% y/y) but the growth in EBT of Tien Phong Commercial Joint Stock Bank (TPBank; HoSE: TPB) was only 8.7% y/y – nearly VND 1.77 trillion. This limited growth was due to a narrowing of NIM (down 20 basis points qoq) and a sharp increase in average deposit rates (up 125 bps qoq). Notably, asset quality deteriorated rapidly with overdue debt skyrocketing to 112% compared to the beginning of the year. Particularly, Group 2 debt and bad debt increased by 124.6 % and 84% respectively compared to the beginning of the year. Accordingly, the bad debt ratio increased to 1.44% in the first quarter of 2023 (compared to 0.84% ​​in the fourth quarter of 2022).

Despite the slowdown in credit demand, TPB still achieved a higher-than-expected credit growth of 5.8% in the first quarter of 2023, reaching VND193.3 trillion. Accordingly, the net LDR ratio increased to 87.8% in the first quarter of 2023 (compared to 85% in the fourth quarter of 2022), with a total deposit of 220 trillion VND (up 2.2% compared to the beginning of the year). year). In the first quarter of 2023, corporate lending was the driving force for credit growth (+11.3% y/y to VND75 trillion).

In this quarter, TPB’s retail lending growth slowed down (up 4.4% y/y to VND98 trillion), as home loan interest rates remained at a high level, reducing demand for loans. Besides, the balance of corporate bonds decreased slightly by 5.3% YTD to 20.5 trillion dong, equivalent to 10.6% of total credit in the first quarter of 2023. Bonds of the real estate, construction and renewable energy sectors accounted for 46%, 19% and 13.4% of the total corporate bond balance at the end of the first quarter of 2023, respectively.

SSI does not exclude the possibility that the bank will implement debt restructuring according to Circular 02 in the near future, this will partially support TPB in reducing the rate of group 2 debt formation, delaying the bad debt ratio and reducing the bad debt ratio. provisioning burden for 2023. However, SSI believes that the bank will now be more careful in classifying customer groups that are eligible for restructuring in the near future, otherwise the provisioning will be The best choice for banks.

In 2023, TPB is expected to achieve pre-tax profit of VND 8.2 trillion (up 4.8% y/y). SSI believes that declining NIM (30 basis points y/y) and provisioning burden (up 22% y/y) will be the main reasons for TPB’s 2023 core profit deceleration. Going to 2024, with a low pre-tax profit base, SSI forecasts that TPB’s pre-tax profit will reach VND9 trillion (+9.8% y/y), thanks to good NII and NFI growth of 11, respectively. 9% and 24.4% y/y, in which payment service fees and bancassurance income are expected to recover.

Based on the above factors and recent developments, SSI moves its valuation base to mid-2024 and raises its 1-year target price for TPB stock to VND 24,300/share (from VND 22,800), equivalent to P /B target is 1.0x.

Due to the high proportion of loans to real estate investors (12%), home loans (18%) and corporate bonds (10.7%), SSI is still concerned that asset quality will continue to decline. decline may last longer than expected and hinder NIM recovery. Therefore, SSI believes that TPB will consider making more provisions. Accordingly, SSI maintains a neutral recommendation for TPB stock.