HAH_BUY_TP 78,000_Upside 24.0_GROWTH IN 2023 DEPENDS ON THE INTERNAL BUSINESS _BSC_Vietnam company update

VALUATION

We recommend FOLLOW for HAH shares with a 2023 fair value of 78,000/share (equivalent to 24% Upside from the reference price dated August 24, 2022), based on a P/E approach with a target P/E of 2022 = 6.5, lower than the average P/E (2019-2021) = 7-8x due to concerns about the risk of operating new vessels in 2023.

FORECASTING BUSINESS RESULTS

In 2022, BSC forecasts HAH to record  net revenue = 3,128 billion VND (+60% yoy), NPATMI = 920 billion VND (+107% yoy), equivalent to EPS FW 2022 = 13,477 VND, P/E FW 2022 = 4.8x, P/B FWD 2022 = 1.8x. In 2023, BSC forecasts HAH to record  net revenue = 3,656 billion VND (+17% yoy), NPATMI = 819 billion VND (-11% yoy), equivalent to EPS FW 2023 = 11,991 VND, P/E FW 2022 = 5. 4, P/B FWD 2022 = 1. 4, based on the assumption:

1. Port operation: In2022, revenue = 222 billion VND (+4% yoy) thanks to output +3% yoy, service price + 1% yoy. In2023, revenue = 229 billion VND (+3% yoy) thanks to output +2% yoy, service price +1% yoy. Port operating gross profit margin = 57.7% in 2022 and 58.3% in 2023

2. Shipping activities – Excluding joint venture ZIM – HAH

• In 2022, REVENUE self-exploited = VND 2,094 billion (+46% yoy) thanks to volume– 11% yoy (reduced contribution from HAIAN MIND ship), and freight rate + 82% yoy – 5% lower than the average rate of 1H.2022.  Net revenue leased for a term = VND 656 billion (+110% yoy) thanks to the contribution of HAIAN LINK, HAIAN MIND, HAIAN WEST, HAIAN EAST, HAIAN CITY. Gross margin of shipping = 49% based on NVL/SL cost assumption +52% yoy; dvmn cost/number of rounds assumed + 15% yoy due to (1) increased oil prices, (2) intra-Asian routes with higher port fees; depreciation expense + VND81 billion, mainly from HAIAN CITY. Compared to 2021, gross profit margin increased by +14.5% due to self-running rates and increased T/C .
• In 2023, BSC makes a forecast based on the assumption of average oil price = 90 USD /BBL (-10% yoy), freight rate – 16% yoy: Self-exploited revenue = 2,238 billion VND (+23% yoy) with the assumption of output + 33% yoy (mainly from HAIAN CITY and HAIAN WEST), freight rate -16% yoy. revenue lease term = 476 billion VND (-27% yoy) thanks to contributions HAIAN MIND, HAIAN WEST, HAIAN CITY. Gross profit margin = 40% yoy based on materials/volume cost assumption -10% yoy, assuming a slight decrease in out-of-pocket/round service cost of -6% yoy due to falling oil prices, depreciation expense of +105 billion VND due to the contribution of A ROKU, 2 new ships received Q4.2023. Compared to 2202, gross profit margin decreased by 9.9%,due to (1) a sharper drop in freight rates than oil prices, (2) increased depreciation.

3. ZIM – HAH joint venture: BSC forecasts that ZIM – HAH will record revenue = 12 billion VND, LNG = -0.4 billion VND in 2022, and revenue = 459 billion VND, LNG = 2 billion VND in2023.

BUSINESS UPDATES

• In 1H.2022, HAH recorded  net revenue = 1,582 billion VND (+96% yoy), NPATMI = 440 billion VND (+195% yoy). In which: 1. REVENUE port operation = 112 billion VND (+8% yoy) due to output + 6% yoy, price +2% yoy. 2. REVENUE operates ships =1,566 billion VND (+106% yoy) thanks to i) average freight + 115% yoy, ii) fleet size for term lease +2 svck ships with higher rates