ACV_BUY_TP 105,000_Upside 21%_Flights to china are reconected _BSC_Vietnam company update

PRICING PERSPECTIVES                                        

We recommend BUY for ACV shares with a fair value of VND 100,000/share, equivalent to upside +18% compared with the closing price at 26/12/2022, based on targeted EV/EBITDA method = 20 – 21x. In comparison to the previous report, BSC has adjusted the upside prediction mainly because (1) the amount of passenger recovered 16% beyond our expectation, (2) deposit rate increases by 1.5%. However, BSC has discounted 12% of the targeted EV/EBITDA (from 22-23x to 20-21x) because of the increment of discount rate.

FORECASTING BUSINESS RESULT

In 2022, BSC forecasts ACV to record 14,831 billion VND (+212% yoy) in Revenue, 6,925 billion VND (+1343% yoy) in NAPTMI,  equivalent to EBITDA FWD = 7,743/share, EV/EBITDA FWD = 20.8x.

In 2023, BSC forecasts ACV to record 18,692 billion VND (+37% yoy) in Revenue, 7,745 billion VND (+12% yoy) in NAPTMI,  equivalent to EBITDA FWD = 9,391/share, EV/EBITDA FWD = 17.2x.

In comparison with previous report, BSC has adjusted:

• Increase the total volume of dosmestic passenger from 80 million to 91.6 million (+15% of the old forecast) in 2022, and from 82 million to 91.9 million (+12% of the old forecast) in 2023.
• Increase international passenger volume from 7.9 million to 10.8 million (+37% of the old forecast) in 2022, and from 15.5 million to 17.4 million (+12% of the old forecast) in the year 2023.
• Decrease JPY/VND fluctuation in 2022 from -14% to -11% yoy because JPY had rised in Q3/2022.
• Increase deposit rate by 1.5% 2023

BUSINESS OUTLOOK 2022 - 2023

The core business is positive thanks to the recovery of international flights

CATALYSTS

(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 UPDATE

• In 9M.2022, ACV recorded DTT = 9,725 billion VND (+156% yoy%), NPATMI = 5,164 billion VND (+3,060% yoy). This is mainly from the recovery of passenger volume (+179% yoy) when the international flights are back.
• Financial income increases by 52% yoy because of foreign exchange differences of JPY debt. In Q3/2022, JPY has lost 20% YTD
• Gross profit margin is at 48% in comparison with -16% over the same period because of volume recovery.

RISKS: (1) JPY increases