Title VGC_Tracking_TP 18,510 VND_ Stock exchange transfering & Divestment_BSC Company Update_25022019
Report Type Phân tích công ty
Source BSC
Bussiness VGC
Detail Date : 03/04/2019
Total pages : 7
Language : English
File Type : .PDF
FileSize : 447 Kb
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Short Content

Valuation
We recommend TRACKING for VGC shares with a target price for 2019 of VND 18,510 based on sum of the parts valuation for the two main segments (1) construction materials (P/E method with the target multiple of 9x) and (2) real estate and industrial parks (IPs) (P/B method, target P/B of 1x).

Business results forecast
BSC forecasts that VGC's net revenue in 2019 will reach VND 9,247 billion (+ 2.9% YoY), profit after tax is VND 622.7 billion (+ 10.9% YoY), equivalent to EPS = 1,242 VND/share, P/E fw = 16.3x

Investment Highlights
(1) Industrial parks leasing is potential, with the forecasted occupied area in 2019 is 90 hectares, revenue + 7% YoY. As of June 30, 2018, VGC owns 9 industrial parks with the total area of 1,800 ha; the vacant area make up for 63% (over 1,100 ha), of which 350 ha is clearance site and 190 ha having infrastructure is ready for lease . In 2019, the company plans to invest in Yen My IP (Hung Yen, 280ha, expected to start construction in Q1/2019) and Yen Phong IIC (Bac Ninh, 200 hectares, expected to start Q2/2019) increasing the total IP area by 30% to capture the growing demand for IPs due to the shifting wave of production from China to Vietnam. The increase in the rent area will also favor IP operation segment (+12.9% YoY) with relatively high and stable profit margin (nearly 30%).
(2) VGC has a diversified list of building material products with considerable scale such as building glasses; tiles (3% market share of ceramic tiles and 12% with granite tiles), terracotta ; sanitary ware (11% of market share). Although the material market is not as favorable as 1-2 years ago, we assess that the fuel price (oil and gas) is expected to decrease (from 8-10%) in 2019 will help the company to improve profit margin.

Catalyst

• Listed in HOSE in 2019.
• Divestment of state capital: The state ownership in Viglacera must be reduced to 0% in 2019 as planned.

Investment Risk
• Rising competition in the building material segment.
• Fluctuating material prices
• Dependence on the real estate market.

Company Update
(1) Business results 2018: Net revenue reached VND 8,984 billion (-2.3% YoY), NPAT for parent company shareholders reached VND 561.6 billion (-6.4% YoY), equivalent to EPS = VND 1,253/share (not taking the bonus and welfare fund into account).
(2) Business plan 2019: Consolidated revenue is 9,300 billion (+ 3.2% YoY), EBT is 950 billion (+ 12.7% YoY), expected dividend payout is 10%.