VINGROUP JSC - OUTPERFORM (VIC: HSX - Financials)

Transcription

1 Price chart Stock Data as of November 30 th 2017 Price (VND) 74,500 Current listed shares 2,637,707,954 Outstanding shares 2,456,818, Week high 77, week low 40,000 Price change (3 months) 51% Price change (6 months) 85.1% Price change (12 months) 77% Free float (share) 923,197,784 Trading value (VNDmil) (average last five trading days) 141,439 Market Cap (VNDmil) 183,032,996 Market Cap (US$mil) 8,067 Total room (no. of share) 764,935,306 Current room (no. of share) 505,765,701 Foreign owned ratio (%) 9.89% Foreign ownership limit (%) 29.0% Main Ratios FY2017F FY2018F Liquidity - Current ratio Quick ratio Profitability - Gross margin 33.2% 34.3% - Net margin 4.8% 5.0% - ROE 8.9% 12.2% - ROA 2.1% 2.5% Operating Efficiency - Receivable turnover Inventory turnover Asset turnover Earnings model VINGROUP JSC - OUTPERFORM (VIC: HSX - Financials) Unit: VNDmillion FY2015 FY2016 FY2017F FY2018F FY2019F Net sales 34,047,966 57,614,344 88,040, ,434, ,163,046 % y/y 22.8% 69.2% 52.8% 48.2% 6.7% Gross profit 11,709,032 17,429,711 29,194,254 44,763,051 47,938,899 % y/y 12.2% 48.9% 67.5% 53.3% 7.1% EBITDA 7,043,964 8,586,612 11,948,964 20,603,761 22,915,146 % y/y -22.7% 21.9% 39.2% 72.4% 11.2% Net profit after tax 1,501,476 3,513,068 4,544,508 7,573,561 10,460,409 % y/y -60.2% 134.0% 29.4% 66.7% 38.1% NPATMI 1,215,775 2,439,511 4,228,184 6,559,567 7,496,561 % y/y -61.5% 100.7% 73.3% 55.1% 14.3% EPS (VND) 558 1,178 1,721 2,670 3,051 % y/y -70.6% 111.1% 46.1% 55.1% 14.3% P/E EV/EBITDA P/B Source: VIC, (F): HSC forecasts We rate VIC as an Outperform with a fair value price of VND 102,617. Which is based on our RNAV also of VND 102,617 per share. In our earnings model we forecast revenues will increase at a CAGR of 25.7% during the three year period, FY and that NPATMI will rise at a CAGR of 33.2% over the same period. Given the strong growth potential we see forward FY2018 PEG of 1.16 xs which looks cheap compared to regional peers. We have now revised up NPATMI for both FY2017 and FY2018 based on new information about the allocation of SG&A by segment. VIC has created a lifestyle ecosystem around their core real estate development business. By adding hospitality; retail leasing; retail; education and healthcare segments. Over the next 3 years, VIC will focus on building a nationwide presence across their product footprint in order to consolidate their dominance. Their entry into the affordable housing segment is a long term project that looks particularly exciting in terms of future potential. With a very dynamic management team and excellent access to international capital markets, VIC has built an enviable track record. Head of Real Estate Sector Nguyen Thi Yen yen.nt@hsc.com.vn Senior Analyst Ha Hong Hoa hoa.hhong@hsc.com.vn 1

2 Based on new information recently provided by the company after we had published our recent report and specifically related to the question of minority interest for 2017 and 2018, HSC has decided to revise up its bottom line forecasts for Central Park We keep our top line forecast unchanged whilst revising up our NPATMI now calling for a 73% y/y increase in FY2017 and a 55% y/y increase in FY due to changes in the minority interest assumptions and based on additional information provided by the company. Adjusted forecast on NPATMI marks a 34% higher than HSC s previous estimate. We previously forecast that; FY2017 NPATMI of VND 3.16 trillion (+29% y/y) given FY2017 minority interest of VND 1.39 trillion. Amounting to 31% of the NPAT. FY2018 NPATMI of VND 5.3 trillion (+68% y/y) given FY2018 minority interest of VND 2.27 trillion or 30% of the NPAT. Then we allocated the SG&A expense proportionately by sales generated from corresponding segment while in fact, some segments such as Residential or Vincomerce, which account for the bulk of total MI also has a higher SG&A weight compared to other segments. After having received additional information in the last few days on how SG&A expense is incurred in the different segments we now understand that SG&A is not always allocated in exact proportion with revenues. As a result, we have updated our allocation assumptions for SG&A expense which; 1. Increases the allocation to the Residential segment to reflect sales commission as the largest proportion of SG&A; 2. Increases the allocation to the Consumer Retail segment to reflect operating expenses such as rental fee, staff cost, logistics as a significant bulk of SG&A. This has then led us to update our estimation for NPATMI. After revising and reallocating all segment expenses more appropriately, FY2017 MI falls sharply from VND 1.39 trillion to VND 316 billion, thus increasing NPATMI from VND 3.16 trillion to VND 4.23 trillion (+73% y/y). This generating FY2017 EPS of VND 1,721 per share (+46% y/y) for a forward P/E of 43.3 xs. While for FY2018, we estimate that NPATMI will reach VND 6.56 trillion (+55% y/y) vs. VND 5.3 trillion as previously. Delivering FY2018 forward EPS of VND 2,670 per share (+55% y/y) and forward P/E of 27.9 xs. HSC FY2017 forecast now calls for 73% y/y growth in NPATMI We forecast FY2017 net sales of VND trillion (+52.8% y/y) and NPATMI of VND 4.23 trillion (+73% y/y) given the following assumptions; 1. We expect residential real estate bookings for FY2017 will come to VND trillion (+61% y/y) with the booking of VND 9.6 trillion from Times City Park Hill, VND 17.8 trillion from Central Park, VND 5.96 trillion from Gardenia, VND 5.75 trillion from the Harmony, VND 1.3 trillion from Dragon Bay, VND 950 billion from Golden River, VND 900 billion from Greenbay, VND 650 billion from Imperia, VND 16.8 trillion from beach villas/ shophouses/landed products in various projects. 2. We assume leasing income grows 35% y/y as more shopping malls open so that sales will reach VND 4.49 trillion. GPM to range between 55% and 57% over the next 2 years. 3. Estimate that Hotel & Entertainment income will grow around 34.3% y/y to VND 5.7 trillion as VIC pushes sale to improve the occupancy rate. Higher number of new rooms added lead to temporarily overall GPM of 42%. 4. We assume Retail revenues can reach VND trillion (+47.2% y/y). GPM will be remain unchanged at 7% as we see continual expansion. We can expect a better margins afterwards at 10-11% when more stores break even. 2 Page 2

3 5. Project overall GPM levels at 33.2% vs. 30.3%. As a gradually better products mix. Gardenia Project 6. Assume net financial loss comes to VND 4.2 trillion given more debts incurred to finance new segments along with expansion in some others. 7. Assume SG&A expenses will be VND 17.4 trillion (+42.8% y/y) due to simultaneous expansion in Retail and Hospitality segment. With this we forecast NPATMI of VND 4.23 trillion (+73% y/y). Delivering a FY2017 forward EPS of VND 1,721 and forward P/E of 43.3 xs. HSC FY2018 forecast now calls for 55% y/y increase in NPATMI We forecast FY2018 with net sales of VND trillion (+48.2% y/y) and NPATMI of VND 6.56 trillion (+55% y/y) given the following assumptions; 1. We expect residential real estate bookings for 2018 will come to VND trillion (+43% y/y) with the booking of VND 2 trillion from Times City Park Hill, VND 18.3 trillion from Central Park, VND 11.7 trillion from Golden River, VND 13.4 trillion from The Harmony, VND 5.95 trillion from Gardenia, VND 9.9 trillion from Greenbay, VND 3.1 trillion from Skylake, VND 12.3 trillion from Imperia, VND 1.4 trillion from Dragon Bay, and VND 8.4 trillion from beach villas and landed products in various projects, plus VND trillion from other new segments. 2. We assume leasing income grows 27% y/y as more shopping malls open so that sales will reach VND 5.7 trillion. GPM ranges between 55-57%. 3. Estimate that Hotel & Entertainment income will grow around 30% y/y to VND 6.42 trillion as VIC pushes sale to improve the occupancy rate while the number of beach villas and condotels from various projects will be completed. Higher number of new rooms added in 8 new resorts won t help to anchor GPM which won t exceed 40%. 4. We assume Retail revenues can reach VND 27.3 trillion (+100 xs y/y). GPM will range between 7-10% with expectation of more existing stores come to breakeven point. 5. Project overall GPM levels at 34.3% vs. 33.2% in 2017 given all the underlying assumptions. With all segments GPM are struggling due to simultaneous expansion. 6. Assume net financial loss comes to VND 3.5 trillion as the interest expense is seen to be high. 7. Assume SG&A expenses will be VND 25.6 trillion (+47.1% y/y) due to simultaneous expansion. Even so, this rate is forecasted to be slower than prior year as Hospitality will have a pause after the grand openings of 8 resorts in With this we forecast NPATMI of VND 6.56 trillion (+55% y/y). Delivering a FY2018 forward EPS of VND 2,670 and forward P/E of 27.9 xs. 3 Page 3

4 FINANCIAL RATIO COMPANY UPDATE Unit: VNDmillion INCOME STATEMENT FY2016 FY2017F FY2018F FY2019F Net sales 57,614,344 88,040, ,434, ,163,046 Cost of goods sold 40,184,633 58,846,533 85,671,447 91,224,147 Gross profit 17,429,711 29,194,254 44,763,051 47,938,899 Net financial income 472,523 (4,203,752) (6,513,255) (3,920,889) SGA expenses 12,198,906 17,416,323 25,627,194 26,646,326 Operating profit 5,723,151 7,574,179 12,622,602 17,371,684 EBITDA 8,586,612 11,948,964 20,603,761 22,915,146 Pretax profit 5,792,759 7,574,179 12,622,602 17,371,684 Net profit after tax 3,513,068 4,544,508 7,573,561 10,460,409 NPATMI 2,439,511 4,228,184 6,559,567 7,496,561 EPS (VND) 1,178 1,721 2,670 3,051 BALANCE SHEET FY2016 FY2017F FY2018F FY2019F Current Assets 87,583, ,708, ,365, ,538,492 Cash & cash equivalents 9,833,332 11,505,411 9,921,678 8,769,570 Short term investments 494, , , ,157 Receivables 18,254,656 27,895,038 41,327,155 44,092,728 Inventories 49,782,781 66,276, ,081, ,130,429 Other current assets 9,218,876 16,538,024 22,540,894 25,051,608 Long-term Assets 92,867, ,274, ,095, ,246,452 Long-term receivables 465, , , ,313 Fixed assets 26,878,731 31,566,781 36,319,879 40,853,885 Investment Properties 17,362,127 18,024,587 17,864,129 17,768,092 Long term assets in progress 33,991,567 40,550,866 44,605,953 49,066,548 Long-term investments 3,347,545 4,601,282 9,236,722 12,058,559 Other long-term assets 10,821,571 9,171,193 8,656,051 8,113,054 Total Assets 180,450, ,983, ,460, ,784,944 Liabilities 135,184, ,172, ,076, ,940,071 Current Liabilities 97,627, ,279, ,758, ,227,532 Long-term liabilities 37,556,524 44,892,653 49,317,673 51,712,539 Owners' Equity 45,266,395 49,810,902 57,384,463 67,844,872 Shared capital 26,377,080 26,377,080 26,377,080 26,377,080 Retained earnings & other funds 18,889,315 23,433,823 31,007,384 41,467,793 Total Resources 180,450, ,983, ,460, ,784,944 RATIO ANALYSIS FY2016 FY2017F FY2018F FY2019F Valuation EPS (VND) 1,178 1,721 2,670 3,051 EBITDA (VNDm) 8,586,612 11,948,964 20,603,761 22,915,146 BVPS (VND) 10,192 11,795 14,281 17,123 DPS (VND) P/E (x) EV/EBITDA (x) P/B (x) Dividend yield (%) Profitability Gross margin 30.3% 33.2% 34.3% 34.4% EBITDA margin 14.9% 13.6% 15.8% 16.5% Pretax margin 10.1% 8.6% 9.7% 12.5% Net margin 4.2% 4.8% 5.0% 5.4% SG&A/sales (%) 21.2% 19.8% 19.6% 19.1% ROE (%) 5.9% 8.9% 12.2% 12.0% ROA (%) 1.5% 2.1% 2.5% 2.5% Liquidity Current ratio Quick ratio Leverage Debt/Equity Total debt ratio EBIT interest coverage ratio Efficiency Days sales outstanding Days in inventories Days payables outstanding Cash Conversion Cycle (days) CASH FLOW STATEMENT FY2016 FY2017F FY2018F FY2019F Net cash flow from operating activities Net cash flow from investment activities Net cash flow from financing activities 4,498,547 6,226,935 8,313,416 9,106,698 (830,528) (13,334,578) (14,751,069) (13,342,976) (778,068) 8,779,722 4,853,920 3,084,170 Net cash flow of the year 2,889,951 1,672,079 (1,583,733) (1,152,108) Cash&cash equivalents at the beginning of year Effect of foreign exchange differences Cash&cash equivalents at the end of year 6,938,465 9,833,332 11,505,411 9,921,678 4, ,833,332 11,505,411 9,921,678 8,769,570 4 Page 4

5 Global Disclaimer July 14h 2008 Copyright 2017 Ho Chi Minh Securities Corporation (HSC). All rights reserved. This report has been prepared and issued by HSC or one of its affiliates for distribution in Vietnam and overseas. Opinions, estimates and projection expressed in this report represent the current views of the author at the date of publication only. They do not necessarily reflect the opinions of HSC and are subject to change without notice. HSC has no obligation to update, amend or in any way modify this report or otherwise notify a reader thereof in the event that any of the subject matter or opinion, projection or estimate contained within it changes or becomes inaccurate. The information herein was obtained from various sources and we do not guarantee its accuracy or completeness. Prices and availability of financial instruments are also subject to change without notice. This published research may be considered by HSC when buying or selling proprietary positions or positions held by funds under its management. HSC may trade for its own account as a result of short term trading suggestions from analysts and may also engage in securities transactions in a manner inconsistent with this report and opinions expressed there in. Neither the information nor any opinion expressed in this report constitutes an offer, nor an invitation to make an offer, to buy or to sell any securities or any option, futures or other derivative instruments in any jurisdiction. Nor should it be construed as an advertisement for any financial instruments. Officers of HSC may have a financial interest in securities mentioned in this report or in related instruments. This research report is prepared for general circulation for general information only. It does not have regard to the specific investment objectives, financial situation or particular needs of any person who may receive or read this report. Investor should note that the prices of securities fluctuate and may rise and fall. Past performance, if any, is no guide to the future. The financial instruments discussed in this report may not be suitable for all investors. Investors must make their own financial decisions based on their independent financial advisors as they believe necessary and based on their particular financial situation and investment objectives. As this report is HSC s property and not public information, this report and any part of this report may not be copied, reproduced, published or redistributed by any person for any purpose without the express permission of HSC in writing. Please cite sources when quoting. Any Party shall be liable to HSC for any cost, loss or damage incurred by HSC or HSC clients as a result of any other breach under this Disclaimer in accordance with law. Explanation of Equity Research Ratings BUY: Expected to outperform the market by more than 10% per annum OUTPERFORM: Expected to outperform the market by 10% per annum HOLD: Expected to perform in line with the market UNDERPERFORM: Expected to underperform the market by 10% per annum SELL: Expected to underperform the market by more than 10% per annum HEAD OFFICE Level 5 & 6, AB Tower 76 Le Lai, District 1, HCMC T : (+84 28) F : (+84 28) HANOI OFFICE Level 2, Cornerstone building 16 Phan Chu Trinh, Hoan Kiem District T: (+84 24) F: (+84 24) E: info@hsc.com.vn W: 5 Page 5