Short Content |
Valuation
We recommend BUY RAL with the target price of VND 124,200/share, upside 20% under P/E method. Currently, RAL is traded at VND 103,800/share, equivalent to P/E trailing of 7.54x, much lower than other peers and VNIndex.
Earnings forecast
BSC forecast that RAL’s revenue and EAT in 2018 will be VND 3,470 billion (+6.1% yoy) and VND 225 billion (+5.13% yoy) respectively. EPS will be VND 14,694, after deducting 25% welfare and bonus fund.
Company Update
• Net revenue reached VND 1,498 billion, gained 5.98% yoy and EAT is VND 80 billion, (-3.77% yoy) in 1H2018.
• Profit margins have improved. Operating margin increased to 8.55% in 1H2018, higher than the margin of 8.09% of DQC.
• RAL got new export contracts to Srilanka (10 million lamps) and Cuba.
• The asset value of Ha Dinh, its headquater, (57,000sq.m) is not recorded in the balance sheet.
• RAL ask for shareholders’s approval for real estate as new business segment.
• RAL make 25% cash dividend payment for the first time in 2018, ex-right date was 05, September 2018.
Catalyst
• Earnings continue to grow.
• Selling or building office at Ha Dinh street.
Risks
• High competition, especially with Chinese enterprises, negatively affects the consumption of RAL products.
• Cost of sales, promotion were substantial and continue to increase
• High receivables and inventory account may destroy profit margin and make negative cash flow of the company.
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