HAX_BUY_TP40000_Upside 25_BSC Company Update

VALUATION

We recommend BUY for HAX stock at a target price of VND 40,000 determined by the P/E valuation method with P/E of 2022 = 9.5x in order to reflect (1) the positive movement of the industry and strong growth in terms of gross profit and (2) reasonable P/E level increase due to the context of low rate.

BUSINESS RESULTS FORECAST

BSC forecasts HAX’s business results in 2021-2022 as follows:

- In 2021: GROSS REVENUE and PROFIT AFTER TAX&DTS reached VND 5,801 billion (+4.2% YoY) and VND 116 billion(-7% YoY), EPS FW2021 = VND 2,332/SHARE, respectively, with P/E FW2021 = 13.7 x.

- In 2022: GROSS REVENUE and PROFIT AFTER TAX&DTS VND 6.317 billion (+8.9% YoY) and  VND208 billion (+80% YoY), EPS FW2021 = VND 4,208/share, respectively, with P/E FW 2022 = 7.6x.

The main assumptions for HAX include (1) Vehicle production in 2021-2022 reached 2,463 (-1.6% YoY) and 2,586 units (+5% YoY) and (2) Gross profit margin increased sharply from 4.6% in 2021 to 6.0% in 2022.

INVESTMENT OUTLOOK

§  Profit in 2022 reached a historic peak (VND 208 billion, +80% YoY) thanks to (1) Booming demand after the epidemic and stimulated by registration fee support and (2) Increased profit margin due to declining competition.

RISK

§ COVID-19 is a negative development that reduces the demand for cars.

§ HSBC bonds are likely to be converted into shares by 2022 diluting EPS.

BUSINESS UPDATES