BMP_BUY_TP 76,900_Upside 24.0_BENEFITS FROM REDUCED MATERIALS PRICES_BSC_Vietnam company update

Valuation

• BSC recommends to BUY BMP stock with a target price of VND 76,900/share, equivalent to 24% upside compared to the price on September 7, 2022 based on two valuation methods PE and FCFF, ratio 50:50.

Forecasting business results

• BSC forecasts BMP's revenue and net profit in 2022 at VND 5,527 billion (+21.4% yoy) and VND 513 billion (+139.7% yoy) assuming: output +5.8% yoy, gross margin increase 23.6% thanks to +15% yoy selling price and flat raw material price compared to 2021.
• In 2023, BSC forecasts net profit and NPAT at VND5,937 billion (+7.1% yoy) and VND531 billion (+3.5% yoy) respectively, assuming sales volume recovers to 105-110 thousand tons before the pandemic , approaching the maximum power level.

Investment perspective

• Consumption output gradually recovered to maximum capacity thanks to the control of the epidemic and the dominant advantage in the market share of plastic pipes in the South.
• Gross margin improved thanks to a downward trend in input prices, while selling prices decreased more slowly than cost of goods sold.
• High and regular dividends. Valuation (P/E) drops to historical average 

Risk  

• Material price fluctuations;
• Declining demand for plastic pipes..

Business Update

• Accumulated 6M2022, BMP's revenue is 2,905 billion VND (+11% yoy) and EAT is 273 billion VND (+117% yoy). Gross profit margin recovered to 24.4% (+930 bps ).
• Cumulative sales volume in 6M2022 -12% yoy, reaching 48,988 thousand tons.