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Analyst Pin-board MPC: AGM update – Brighter business outlook in 2H-FY21 but container shortage to continue

• In 2021, MPC plans to reach VND 15,755 Bn (or USD 685 Mn, +10% YoY) in revenue and VND 1,092 Bn (or USD 47 Mn, +63% YoY). MPC estimates 1H-FY21 pre-tax profit at VND 300 Bn (+11% YoY), completing 27% target. MPC proposes FY21 cash dividend of 5,000-7,000 VND/share (dividend yield 14.1% - 19.8%), the payout ratio 92%-129% based on 2021 guidance. However, we are still suspicious about the ability to fulfill earnings and cash dividend guidance amid soaring freight costs and upcoming large CAPEX.
• 2H-FY21 revenue could bounce back strongly thanks to both export volume and ASP recovery, driven by strong demand rebound and Indian shrimp supply shortage. We expect gross margin will improve in the subsequent quarters because ASP could rise faster than raw materials prices. However, high freight costs could be a bottleneck for MPC to achieve its profit guidance.
• MPC's share price has rallied by 15% since the beginning of June 2021. We believe this short-term positive reaction is supported by the information that MPC would set high business guidance and very attractive dividend guidance. At the closing price on June 21, 2021, MPC is trading at a trailing P/E of 12.6x, higher than the 5-year average P/E of 9.6x. We note that the stock price may increase in line with the tailwinds of the shrimp export and positive business results in 2H-FY21