Vinacafe Bien Hoa JSC (VCF:HOSE): AGM Notes

Transcription

1 Vinacafe Bien Hoa JSC (VCF:HOSE): AGM Notes 2013 Recap: Success in new product launch In 2013, revenue reached VND 2,299 bn (~8.7% YoY). Gross profit improved to 29.8% (2012: 27.6%). However, operating income and PBT decreased to 270 bn (~- 11% YoY) and VND 287 bn (~-12% YoY) respectively. Revenue and Gross profit breakdown: Result Coffee Nutrition cereals Others 2013 YoY (%) 2013 YoY (%) 2013 YoY (%) Net revenue 1,842, % 329, % 126, % - Domestic 1,671, % 326, % 125, % - Export 171, % 2, % 1, % Gross profit 439, % 127, % 118, % Source: Company 2013 annual report, SSI Research New products: VCF launched two instant coffee brands: Wake-Up Sai Gon, which was a re-launch, and Café Phinn, which is a new 2-in-1 product. Wake-Up Sai Gon achieved VND 557 bn (238% YoY) in revenue in 2013 which accounted for 24.2 total sales in Abrupt increase in selling expense (~53 % YoY) was a result of an effort to boost brand recognition for existing and new products through distribution channels and advertising activities. According to the company, its products were advertised more than 3,000 times via LCD screens across the country and featured in 2.5 mn newspapers and magazine issues. In addition, VCF offered product samples to 23 buildings and 31 supermarkets. Change in ownership structure: In December 2013, Gaoling Fund paid VND bn to purchase 6.2 million VCF shares from Vinacafe and in the process became the second largest shareholder of the coffee company. Gaoling Fund. L.P. is an Asia 1

2 focused fund managed by Hillhouse Capital Management, the third largest hedge fund in Asia with $5 billion asset under management. By contrast, Vinacafe reduced its holding by ~65.6% to 3.4 million shares. Masan Consumer, Gaoling Fung and Vinacafe together currently own ~89.4 VCF s outstanding shares. Shareholders Change No of shares % No of shares % No of shares % i. Masan Consumer 14,140, % 14,140, % % ii. Gaoling Fund, L.P % 6,200, % 6,200, % iii. Vietnam National Coffee Corporation (Vinacafe) 9,914, % 3,414, % -6,500, % iv. Others 2,523, % 2,823, % % Total 26,579, % 26,579, % % Source: Company 2012 & 2013 annual reports, SSI Research 2014 Outlook: Aggressive business target At 2014, shareholders approved aggressive targets of VND 3,000 bn in net revenue (~30.5% YoY) and VND 400 bn (~53.6% YoY) in net income for VCF has not achieved its revenue target for the last three years completi on completion completi on Net revenue Net income 1,927,437 1,586,026 82% 2,300,000 2,114,649 92% 3,100,000 2,298,669 74% 139, , % 300, ,242 99% 475, ,389 55% Source: Company 2011, 2012 & 2013 annual report, SSI Research 2

3 Higher gross margin: It is expected that the new Long Thanh factory with a capacity of tons/year will provide VCF with enough instant black coffee so that the company does not have to import this ingredient in Consequently, the cost of production will fall and gross margin may improve and reach 35%. In 4Q13, the opening of Long Thanh factory propelled gross margin to the highest level in the last two years at 32.9%. Dividend: Total dividend payment for 2013 is VND 53 bn which translates into a dividend ratio of 20% on par value, a dividend payout of 20.41% for 2013 and a dividend yield of 1.41% on 22 April VCF has paid an interim dividend of 8% in The rest is expected to be paid in The company currently has VND 751 bn in cash and VND 231 bn in debt. 1Q14 Results: According to the company, net revenue and PAT reached VND 441 bn (~5.8% YoY) and VND 88 bn (~144.4%) respectively which accounted for 14.7% and targets Outlook: We expect that net revenue and gross profit will reach VND 2,538 bn (8.4% YoY) and VND 814 bn respectively, translating to a gross margin of 32.1% (2013: 29.3%). Net income is forecasted to increase 21% YoY to VND 315 bn. Investment View: At the market price of VND 142,000/share on 23 Apr 2014, VCF is being traded at 2014 PE of 12.0x which is reasonable for a leading player in the coffee industry. However, due to its low liquidity characteristic, VCF is more suitable for long-term investment. 3

4 APPENDIX VND Billion VND Billion Balance Sheet Income Statement + Cash & Cash equivalent Net Sales 1,302 1,586 2,115 2,299 + Short-term investments COGS -1,029-1,193-1,531-1,614 + Account receivables Gross Profit Inventories Financial Income Other current assets Financial Expense Total Current Assets ,001 Selling Expense LT Receivables Admin Expense Net Fixed Assets Income from business operation Investment properties Net Other Income LT Investments Income from associates Goodwill Profit Before Tax Other LT Assets Net Income Total Long-Term Assets Minority interest Total Assets ,133 1,613 NI attributable to shareholders Current Liabilities In which: short-term debt Basic EPS (VND) 6,079 7,943 11,221 9,797 + Non-current Liabilies BVPS (VND) 21,790 27,284 35,797 42,654 In which: long-term debt Dividend (VND/share) 1,500 1,500 2,000 2,000 Total Liabilities EBIT Contributed capital EBITDA Share premium Retained earnings Growth + Other capital/fund Sales 27.5% 21.8% 33.4% 8.7% Owners' Equity ,134 EBITDA 20.2% 30.1% 38.0% 81.2% NCI EBIT 21.2% 31.5% 37.8% 77.6% Total Liabilities & Equity ,133 1,613 NI 18.8% 30.7% 41.3% -12.7% Equity 31.1% 25.2% 31.2% 19.2% Cash Flow Chartered Capital 87.5% 0.0% 0.0% 0.0% CF from operating activities Total assets 48.2% 12.2% 38.5% 42.4% CF from investing activities CF from financing activities Valuation Net increase in cash PER N.a Beginning cash PBR N.a Ending cash P/Sales N.a Dividend yield N.a 8.5% 8.6% 1.8% Liquidity Ratios EV/EBITDA N.a Current ratio EV/Sales N.a Acid-test ratio Cash ratio Profitability Ratios Net debt / EBITDA Gross Margin 21.0% 24.7% 27.6% 29.8% Interest coverage N.a Operating Margin 12.6% 13.5% 13.5% 11.1% Days of receivables Net Margin 12.4% 13.3% 14.1% 11.3% Days of payables Selling exp./net sales 7.4% 10.7% 12.0% 17.0% Days of inventory Admin exp./net sales 2.2% 2.0% 2.0% 1.6% ROE 31.6% 32.4% 35.6% 25.0% Capital Structure ROA 26.5% 27.3% 30.6% 19.0% Equity/Total asset ROIC 31.5% 32.5% 35.6% 22.5% Liabilities/Total Assets Liabilities/Equity Debt/Equity ST Debt/Equity Source: Company s historical financial reports, SSI Research 4

5 RATING Within 12-month horizon, SSIResearch rates stocks as either BUY, HOLD or SELL determined by the stock s expected return relative to the market required rate of return, which is 16% (*). A BUY rating is given when the security is expected to deliver absolute returns of 16% or greater. A SELL rating is given when the security is expected to deliver returns below or equal to negative - 8%, while a HOLD rating implies returns between negative - 8% and 16%. Besides, SSIResearch also provides Short-term rating where stock price is expected to rise/reduce within three months because of a stock catalyst or event. Short-term rating may be different from 12-month rating. Industry Rating: We provide the analyst industry rating as follows: Overweight: The analyst expects the performance of the industry over the next 6-12 months to be attractive vs. the relevant broad market Neutral: The analyst expects the performance of the industry over the next 6-12 months to be in line with the relevant broad market Underweight: The analyst expects the performance of the industry over the next 6-12 months with caution vs. the relevant broad market. *The market required rate of return is calculated based on 1-year Vietnam government bond yield and market risk premium derived from using Relative Equity Market Standard Deviations method. Our rating bands are subject to changes at the time of any significant changes in the above two constituents. DISCLAIMER The information, statements, forecasts and projections contained herein, including any expression of opinion, are based upon sources believed to be reliable but their accuracy, completeness or correctness is not guaranteed. Expressions of opinion herein were arrived at after due and careful consideration and they were based upon the best information then known to us, and in our opinion are fair and reasonable in the circumstances prevailing at the time; Expressions of opinion contained herein are subject to change without notice; This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities; SSI and its affiliates and/or its officers, directors and employees may have positions and may effect transactions in securities of companies mentioned herein and may also perform or seek to perform investment banking services for these companies. This document is for private circulation only and is not for publication in the press or elsewhere; SSI accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its content; The use of any information, statements forecasts and projections contained herein shall be at the sole discretion and risk of the user. CONTACT INFORMATION Phuong Hoang Senior Director, Institutional Research & Investment Advisory phuonghv@ssi.com.vn Thu Le Analyst, Consumer Goods & Services thula@ssi.com.vn SAIGON SECURITIES INC. Member of the Ho Chi Minh Stock Exchange, Regulated by the State Securities Commission HO CHI MINH CITY 72 Nguyen Hue Street, District 1 Ho Chi Minh City Tel: (848) Fax: (848) info@ssi.com.vn HA NOI 1c Ngo Quyen Street Ha Noi City Tel: (848) Fax: (848)