MSH_BUY_TP 66,400 VND_Upside +34.3%_Enjoy opportunities for breakthrough _BSC Initation report

We initiate coverage of MSH stocks with a BUY rating and a VND66,400 price target (+30.8% upside from its closing price on 11/05/2021, including dividends in 2020) using FCFE and P/E method  with the weights of 60% & 40%, respectively. Our recommendation is primary driven by the positive outlook of the textile & apparel industry as well as the company. 

 

MSH sets 2021’s revenue and profit target of VND4,200 billion (+10% YoY) and VND340 billion (+20% YoY), respectively. 

 

- We forecast that MSH’s net revenue and NPAT in 2021 will reach VND4,669 billion (+22.5% YoY) and VND559 billion (+98% YoY) respectively (including VND49 billion from the reversal related to receivables of New York & Company), equivalent to EPS of VND9,197/share and a forward P/E of 5.8.

- Excluding the reversal in 2020 and 2021, MSH’s net revenue and NPAT will reach VND4,669 billion (+22.5% YoY) and VND510 billion (+14.8% YoY) respectively, equivalent to EPS of 8,390 VND/share and a forward P/E of 6.4.

 

(1) MSH’s recovery speed is adversely affected by the Covid-19’s movement disorders

(2) Rising labor costs 

 

(1) In 2021, Vietnam textile & apparel industry is expected to recover from the crisis’s bottom owing to (i) The production in supply-chain recovery with traditional orders rebounded, and (ii) Some events are expected to promote the shift of textile orders to Vietnam.

(2) MSH will recover from the bottom of the crisis with positive chances in 2021: New traditional orders, a newly invested factory (+21% capacity) and a part of bad debt recovered (~VND49 billion).

(3) Financial result & business update in Q1/2021: Net revenue and NPAT recorded VND944 billion (+0.6% YoY) and VND92 billion (+44% YoY), respectively, equivalent to 22.4% of the net revenue and 27.0 % of NPAT in 2021’s plan.