ACV_BUY_TP 105,000_Upside 21.0_INTERNATIONAL ROUTES ARE RECOVERING _BSC_Vietnam company update

PRICING PERSPECTIVES

We recommend BUY for ACV shares with a fair 2023 value of VND 105,000/SHARE, equivalent to Upside +21% compared to the closing price on September 13, 2022), based on the EV/EBITDA method, with target EV/EBITDA = 22x, higher than the average for the period 2016-2019 = 18-19x.

FORECASTING BUSINESS RESULTS

In 2022, BSC forecasts ACV to record DTT = 12,034 billion VND (+153% yoy), NPV's NPATMI = 6,495 billion VND (+1254% yoy), equivalent to EBITDA FWD = 6,997 VND/CP (+1367% yoy), EV/EBITDA FWD = 27.1x. In 2023, BSC forecasts ACV to record DTT = 16,513 billion VND (+37% yoy), NPATMI of ACV = 6,499 billion VND (+0% yoy), EBITDA FWD = VND9,374/SHARE (+34% yoy), EV/EBITDA FWD = 20.2x, based on the assumption:

1. Aviation activities: Domestic passenger volume = 80 million / 82 million passengers in 2022/2023, equivalent to 108%/110% in 2019. International visitor volume = 7.9 million / 15.5 million visitors in 2022/2023, equivalent to 28% / 55% in 2019. Average service price (excluding flight zone assets) + 51% yoy in 2022. In 2023, the average service price is +16% yoy due to a +7% increase in the proportion of international passengers in the structure.

2. Non-aviation operations: BSC assumes a +5% yoy leasing and advertising services revenue in 2022/2023. Revenue from terminal services, utilities, VIP services, F,C + 177% yoy / 14% yoy, thanks to passenger output + 175% yoy / 13% yoy in 2022/2023.

3. Gross profit margin: In 2022, gross profit margin = 51% thanks to depreciation expense decreased by VND 230 billion due to some airports running out of depreciation, staff costs + 20% yoy – assuming 1H.2022, the remaining expenses +2-5% yoy. In 2023, gross profit margin = 63% thanks to depreciation expense decreased by VND 210 billion, assumed employee expenses + 10% yoy, the remaining expenses +2-5% yoy. According to BSC's estimates, the terminal/apron/taxiway equipment of Noi Bai T2 may be out of depreciation from 2022-2024 (starting operation from the end of 2014, depreciation period: 7-8 years). BSC assumes depreciation expense will decrease by VND 200-300 billion in 2023.

4. Financial revenue/expenses

In 2022, financial revenue = VND 3,628 billion (+12% yoy), thanks to interest from deposits = VND 1,664 billion (-4% yoy), interest from exchange rate difference = VND 1,871 billion (+33% yoy) based on jpy/vnd -14% yoy exchange rate assumption. In 2023, financial revenue = VND 1,364 billion (-62% yoy), of which, interest from deposits = VND 1,271 billion (-24% yoy) assuming: deposits, and short-term investments decreased by 50% yoy, equivalent to VND 40,000 billion due to new investment activities LTIA.

BUSINESS OUTLOOKH 2022-2023

• The core contract is positive thanks to the recovery of the international route network.

CATALYST

(1) Long Thanh, Tan Son Nhat T3, Noi Bai T2 projects expanded into operation. (2) Transfer HOSE after successfully determining the state capital. (3) The Chinese market recovered.

BUSINESS UPDATES

• In 1H.2022, ACV recorded DTT = 5,538 billion VND (+62%yoy), NPATMI = 3,472 (+189% yoy), thanks to (1) passenger output +56.8% yoy, including international visitors +905% yoy, domestic +52.6% yoy, (2) average service price +3% yoy due to increased proportion of international passengers.
• Gross profit margin increased by +40% points thanks to an increase in output and selling prices.