LTG - Restructuring initially brought positive signals
Favorable weather will help increase the demand for agricultural materials. Also, farmers' habit of using pesticides is difficult to change, so the segment will continue to contribute stably to earnigns in the coming years. In the rice segment, sales expansion with exporting companies will help improve revenue and profit. Currently, the working capital management has been improved, helping to save interest expenses and improve profit quality.
Due to the improvements in working capital management and better recovery of agricultural materials demand during La-Nina period, we revise up revenue and NPAT in 2021 VND to 8,352 bn and VND 425 bn, both up by 25% compared to previous forecasts. The target price of LTG is also adjusted up from VND 29,000/share to VND 40,200/share. Combined with the cash dividend, the total expected return is 16% compared to the closing price on March 16th, 2021. We recommend to ACCUMULATE this stock.
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