PPC - Earnings will remain strong for the next five years
Due to recent changes in capex plans, PPC has significantly reduced uncertainties in its short-term performance, thus eliminating the related risks and enhancing its ability to maintain a stable annual cash dividend of 2,500 VND/share. This dividend level, corresponding to a yield of 14%, is relatively attractive in such a defensive sector.
Regarding 2018 business results, we estimate that NPAT could rise by 28% YoY to VND 1,093 billion due to the large one-off income from the reversal of the expense from FX differences. However, our projection is that earnings in the coming years would remain at high level even without any extraordinary profits.
Our target price is VND 23,000 per share. This target price, coupled with a VND 2,500 cash dividend in the next 12 months, would yield a total return of 44% (calculated based on the closing price on 23 October). Therefore, we have a BUY recommendation on PPC.
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