MSH - Solid foundations for growth
MSH is one of the leading players in garment industry with a stable business performance and high cash dividend that has been maintained over the years. It mainly exports garment orders to two major markets: USA (60%) and EU (30%). Thanks to the advantage of the EVFTA that is expected to be effective in 2019 along with the movement of orders to Vietnam under the impact of the trade war, the potential for orders growth in these markets is quite large. Besides, MSH strengthened its internal abilities through changes in production methods. It is aiming towards increasing the proportion of FOB, enhance total garment capacity to improve its competitiveness and seize the opportunities of order growth from major fashion partners.
We combine two valuation methods: FCFF and P/E to evaluate MSH’s fair value. Based on that, we estimate the target price at VND 56,500 per share, anticipating a cash dividend of VND 3,500 per share In the next 12 months, which results in a 25% total return from the closing price on January 31st, 2019. Therefore, we recommend BUY on this stock.
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