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Analyst Pin-board: BMP AGM Update – stability

BMP is in our conviction list under a NEUTRAL recommendation, target price VND 48,200 per share plus VND 5,000 per share cash dividend expected in the next twelve months. In our recent result update, we emphasized that Binh Minh Plastic JSC is a solid business. As an industry leader in a market that favors reputable brand names, BMP has shown no impact from COVID-19 in terms of sales. In contrast, it took advantage from the weather conditions to boost sales and became less dependent on the housing market. Over the last quarters, BMP managed to stabilize both gross and net margins, which we think is going to be a strong trajectory for net income in the long-term. Threats from new entrants to the fertile plastic pipe market have eased. We expect that BMP will keep this level of profitability in the future.  We also appreciate the new parent company’s contribution to BMP’s overall efficiency. Last year, BMP restructured its distribution channel to convert more than VND 500 billion working capital into cash. This paves the way for a more generous cash dividend in the future.