VALUATION
We recommend BUY for TLG share with a target price of 75,600 VND/SHARE upside 20% compared to the price on 5/9/2022 with DCF method and P/E with a weighting of 50%/50% respectively.
FORECASTING BUSINESS RESULASSET
BSC expecasset TLG's net revenue and NPAT in 2022 to reach VND 3,725 billion (+40%YoY) and VND 527 billion (+97%YoY), EPS FW = VND 5,290, P/E FW = 12 times thanks to low background growth and lower materials price trend over the same period.
In 2023, net revenue and NPAT will reach VND 4,514 billion (+21%YoY) and VND 625 billion (+19%YoY), equivalent to EPS in 2023 = VND 6,293 and P/E FW = 10 years – 12.4 times lower than the 5-year average PE.
INVESTMENT THESIS
- Gross profit margin improved from 2H/2022 around 44%-45% thanks to (1) an increase in selling prices from 1H/2022~5%YoY and a roadmap to increase selling prices according to the strategy (2) raw material prices tend to decrease (3) restructuring the distribution system.
- Long-term growth comes from (1) the expectation that Thien Long Thanh factory will be put into operation by the end of 2022; (2) premiumization of existing SP series (3) growth potential comes from new OEM and new producasset – based on the advantage of proactively sourcing bioplastic materials.
- Healthy financial structure, stable dividend yield from ~5%/year.
Catalyst
- Strategic investors and shareholders increase ownership rates
- The potential comes from investingwith large enterprises to expand B2B channels
RISK
- Input NVL price movemenasset .
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