AGG_BUY_TP 62100_Transformation step_BSC_Vietnam company update

Valuation

§  BSC recommends BUY AGG with target price of VND 62,100/share (+32% compared to the closing price on 17/05/2021 based on RNAV method:

§  Adding BD27 and BD45 projects to the project valuation list based on the feasibility of project implementation.

§  The real estate market recovers and the legal process in Ho Chi Minh City will begin to open from 2022.

§  Provide project WACC discount at 11%

Forecast of business results

§  In 2021, BSC estimates that parent company's revenue and profit after tax will reach VND 3,813 billion (+117% YoY) and VND 519 billion (+25% YoY), respectively, thanks to the handover of projects (1) The Sóng, (2) River Panaroma, (3) Sky89. EPS 2021 FW =5,974 VND/share. PE 2021 FW = 7.9 times.

Investment Thesis

§  Capital scale is low, but possesses an attractive project portfolio, the project scale in the period 2021-2026 is 8 times higher than in the previous period.

§  Ho Chi Minh City's "legal" bottleneck is cleared and the trend of shifting land bank to satellite cities will be the foundation for AGG's valuation growth.

§  2021-2022: Profit falling point thanks to the handover of a series of projects.

§  Profitability of AGG is among the top enterprises in the real estate industry  

Catalyst

§  Issued to existing shareholders in Q3-Q4/2021.

Risks

§  The plan to open and sell projects has been delayed due to legal issues and the Covid-19 epidemic.