Buy recommendation for VNM stock

Foreign Trade Securities Company (VCBS) recommends buying with a target price of VND83,831/share, equivalent to a target P/E of 16.8x based on the positive outlook for input material prices to be maintained next year.

GDP growth reached nearly 7% year-on-year in the first two quarters of the year, retail sales also improved by 1%. The consumer sector grew again, the negative growth of the dairy industry narrowed.

Profit margins will remain positive thanks to low imported milk powder prices. Milk powder production in major EU producers remains high, causing milk powder prices to continue to decline this year. VNM's gross profit margin is forecast to improve by about 4.2% in 2024.

VNM's sales campaign will help revenue improve significantly. VNM's domestic and export revenue is expected to grow by 3.8% and 10% yoy, respectively, in 2024.

Potential from beef segment Beef products are expected to launch in Q4/2024, bringing in revenue of about VND 1,000 billion in 2025 and about VND 3,000 billion in 2029, with gross profit margin for the beef segment reaching about 15% in 2029.

Positive recommendation for BCM stock

According to MB Securities Company (MBS), in the second quarter of 2024, Industrial Development and Investment Corporation (stock code BCM) recorded a 10% decrease in revenue compared to the same period, but net profit increased sharply by 175% due to a sudden increase of 145% in profits shared from VSIP, reaching 375 billion VND and recording profits from business cooperation of 123 billion VND.

In the first 6 months of 2024, BCM recorded revenue of VND 1,973 billion (up 5% YoY) and net profit of VND 499 billion (up 188%). The core business segment of industrial and residential real estate recorded revenue of VND 1,171 billion (down 12%). Regarding investments in joint ventures and associates, we estimate VSIP's after-tax profit to reach VND 925 billion (up 138%), BW's profit will return to VND 67 billion and Becamex Tokyu will lose VND 76 billion in the first 6 months of 2024. Thus, compared to the set plan, the company has only completed 22% of its revenue and profit targets.

In the 2024-2025 period, MBS forecasts revenue to reach VND6,549 billion (down 17%)/VND6,422 billion (down 2%), of which revenue from leasing industrial park land will grow by 56%/13% with the expectation that investment capital flow into Binh Duong will improve as the world economy gradually recovers. Large industrial park projects such as Cay Truong Industrial Park, Becamex Binh Phuoc and Becamex VSIP Binh Dinh are being accelerated to put into operation soon. Profit recorded from joint ventures and associates will reach VND1,371 billion/VND1,580 billion (equivalent to growth of 72%/increase of 15%), of which large profit contributions include VSIP, IJC... In summary, we forecast BCM's net profit in 2024-2025 to reach VND1,775 billion (down 27%)/VND2,284 billion (up 29%).

MBS recommends BCM shares positively with a valuation of VND82,500/share (16% upside potential, including a dividend yield of 1.4%). Investment thesis: The prospect of the industrial park real estate industry will be more positive when attracting FDI after Vietnam strengthens cooperation with the US, Japan and South Korea; Cay Truong Industrial Park project is gradually being cleared of legal issues and will soon be put into operation in the near future; Plan to increase capital by at least VND15,000 billion in 2024-2025.

>> Stock market commentary August 9: The market may continue to fluctuate in the 1,200 - 1,210 range