PHR_BUY_TP 87,000_Upside 30.8_Land conversion bottleneck solved, time of transformation_BSC_Vietnam company update

VALUATION

BSC recommends Buy PHR stock with a target price 87,000 VND/SHARE, upside +30.8% from the price of 18/08/2022 according to the partial pricing method.

FORECASTING BUSINESS RESULTS

BSC forecasts that 2022 will be the beginning of the development of PHR's industrial park segment, according to which:

In 2022: Revenue and NPAT reaching VND 1,990 billion (+2% YoY) and VND 815 billion (+59% YoY), EPS fw = 5,002 VND/share, PE fw = 13.3x, P/B fw = 2.97x.

In 2023: Revenue and NPAT reached VND 2,095 billion (+5% YoY) and VND 1,309 billion (+61% YoY) respectively, EPS fw= VND 8,189/share, PE fw=8.1x, P/B fw=2.57x.

INVESTMENT THESIS

• By removing the legal difficulties in converting rubber land to industrial parks, PHR expects to benefit from the compensation from VSIP 3 Industrial Park and record high profit/dividend from the joint venture company NTC in the period 2022-2024.
• Long-term growth is ensured by IPs that are in the research phase, expected to be implemented in the period of 2023-2025.
• The main business segment is rubber, which is expected to remain positive in the short term thanks to (1) maintained selling prices when the product structure shifts to high-quality rubber and (2) higher exploitation output when the age of the tree is higher.

RISK

• Compensation progress from VSIP 3 Industrial Park is slower than expected.
• Industrial zones that are in the research phase still do not have much information and the risk of delay in project approval from management agencies.

BUSINESS UPDATE

• In 6M2022, revenue reached VND 607 billion (down -20% YoY) while NPAT reached VND 346 billion (increase 116% YoY) thanks to the recording of VND 289 billion in compensation, supporting early liquidation losses for the implementation of VSIP 3 Industrial Park while income from rubber (down -12% YoY) and wood (down -73% YoY) witnessed a slowdown after 2 years of benefiting from high business rubber prices.