VHC_NEUTRAL_TP 35,050 VND_Upside 1.7%_Negative impact from SARS - CoV - 2_BSC Company Update

Valuation
We downgrade our recommendation from BUY to NEUTRAL to VHC stock and adjust the new target price to 35,000 VND/share due to (1) 2019 business results are much lower than expectation (2) BSC adjust the forecast for 2020 (taking into account the impact of the nCoV epidemic).
2020 Business Forecast  
In 2020, BSC forecasts VHC's net revenue and profit after tax reach VND 8,645 billion (+ 9.9% YoY) and VND 956 billion (-18.9% YoY) (lower 23.0% and 38.4% respectively compared to the previous forecast). 2020 EPS is forecast at 5,197 VND/share, equivalent to PE fw 2020 of 6.6.
Investment Risks   
+ Affected by the nCoV epidemic, consumption in the Chinese market is expected to decrease in the following quarter
+ Higher competition in US market in case of POR 15 official of 0% (preliminary POR15 is 0%)
Business update       
2019 business results plummeted. VHC's revenue and profit after tax reached VND 7,867 billion (-15.14% YoY) and VND 1,180.4 billion (-18.16% YoY) respectively, equivalent to completing 78.3% of the revenue plan and 94.0% of the plan PBT. This result is much lower than the latest forecast of BSC: lowering than 12.9% and 11.2% respectively. Accumulated 11M.2019, exports reached US 296 million (-12.4% YoY).
BSC thinks that even 2019 business result was at low level, it is difficult to create strong growth for 2020 when the demand in major markets has not shown signs of improvement.
The nCoV epidemic will have a strong impact on the Chinese consumption in Q1.2020. Thus, China, the main growth driver of pangasius industry, is negative in the short term.