VSC_N/A_TP 31,000_Upside N/A_Tough short-term outlook due to the slowing down of global economy_BSC_Vietnam company update

PRICING PERSPECTIVES                                        

Our 2023 fair value estimation for VSC is 31,000 VND/share, based on targeted P/E method = 10x, 12% discount from the average P/E for 2021 – 2022 period (11-12x), because of (1) low level of earning growth (2) high interest rate environment in 2023. In long-term, this valuation may be changed, when (1) VSC’s position is up (2) VSC steps into a new growth cycle thanks to efficiently use M&A assets. However, BSC hold a neutral view for short-term outlook because of (1) import/export activities is slowing down (2) M&A progress is unclear.

FORECASTING BUSINESS RESULT

In 2022, BSC forecasts that VSC will record 1,979 billion VND (+5% yoy) in Revenue, 332 billion VND (-5% yoy) in NPATMI, equivalent to EPS FWD = 3,015 VND/share, P/E FWD = 10.2x, P/B FWD = 1.0x.  In 2023, BSC forecasts that VSC will record 1,904 billion VND (-4% yoy) in Revenue, 332 billion VND (+3% yoy) in NPATMI, equivalent to EPS FWD = 3,110 VND/share, P/E FWD = 9.9x, P/B FWD = 0.9x, based on the following assumption:

• Loading and Unloading segment: Output -4% yoy because of (1) global economic slowdown, (2) high competition in Hai Phong. Price moves sideway in 2022/23.
• Warehousing, refrigerated container: Output – 4% yoy because of global economic slowdown, price stays flat in 2022/23
• Transportation & others:  Transportation revenue is likely -4% yoy in 2022/23 because of the reduction in output which is based on the assumption of its following the loading and unloading output.
• Gross profit margin = 35.8% is based on the assumption of DVMN/SL -8% due to downward trend of oil price (oil price assumption in 2023 = 80 USD/BBL (-20% yoy)).
• Loss from VIMC Dinh Vu = -40 billion VNĐ in 2023.
• SG&A/ revenue = 10%, add +3% due to increase ICD expense.

2023 BUSINESS OUTLOOK: Reduction in output in 2023 because of (1) global economic slowdown, (2) high competition.

BUSINESS UPDATE

• Accumulated 9M.2022, VSC record 1,488 billion VND (+7% yoy) in net revenue, 264 billion VND (+2% yoy) in NPATMI. Inside: (1) Transportation revenue + 23% yoy thanks to increase price; (2) Loading and unloading -5% yoy, due to reduce in output -6% yoy, price stays flat.
• 9M.2022, Gross profit margin increases by 2 percentage point % yoy thank to reduce outside service expense. In comparison with Q2.2022, gross profit margin in Q3 has decreased by 2 percentage point caused by the loss from new ICD port. SG&A + 32% yoy because ICD port has just operated since the beginning of Q3. As expense has dramatically increased, so that net profit just growth +9% yoy.