LTG_BUY_TP 41,830_Trend for soaring global rice prices_BSC Company Update

BSC forecasts a target price of LTG 2021 of VND 41,830 (+17% upside compared to March 23, 2021) based on two methods of PE (9x) and DCF. Growth drivers are based on: (1) Agricultural materials industry recovers +9-10% YoY in 2021, thanks to recovery in demand (2020 was affected severity of drought and saltwater intrusion); (2) The food industry is estimated to increase by +14.8% YoY thanks to the good season of the 2020-2021 Winter-Spring crop, and a good increase in export rice prices.

BSC expects LTG's net revenue and NPAT to reach VND 8,336 billion (+11.1% YoY) and VND 426 billion (+15.4% YoY) respectively, equivalent to EPS of VND 4,455, PE fw = 8.1x.

 

 

In 2020, LTG's revenue and net profit after tax is VND 7,505 billion (-9.7% YoY) and VND 369 billion (+10% YoY), equivalent to EPS = 4,495 VND, PE TTM = 7.8x. LTG revenue impacted by in 2020:

(1) Revenue of the agricultural materials industry (plant protection products and seeds) reached VND 4,536 billion (-11.8% YoY) and VND 753.5 billion (-13.6% YoY) respectively due to drought.

(2) Revenue of the food industry reached VND 2,126.7 billion (-10.7% YoY) due to the order to stop rice exports due to COVID-19 at the end of 1Q20, the export policy to the Philippines was directed to avoid tax risks.

(3)  Revenue from the agricultural service industry reached VND 301 billion, 19% higher than the first year plan, mainly including marketing services, spraying services by drone and selling agricultural materials.