MSH – Gearing up for a bumpy ride
- Cumulative 9M22 revenue climbed but GPM plummeted to the lowest level in over eight years despite revenue climbing. On a positive note, financial income surged 66% YoY, owing primarily to a 103% increase in net FX gain and a 49% increase in net interest income.
- For FY23, we expect net revenue and NPAT-MI to be VND 5,146 bn/ USD 218.8 mn (-3% YoY) and VND 361bn/USD 15.4 mn (+2% YoY), respectively. Our assumptions are that (1) lower order volume compared to 2022 levels, (2) material costs to ease, and (3) rising deposit interest rates might continue to benefit the company in 2023.
- We maintain an ACCUMUALTE rating while lowering the one-year target price to VND 40,000/share (from VND 48,200/share). The lower TP is primarily driven by downward FY23 earning revisions due to rising inflation risks affecting spending on discretionary items in exporting countries. We also lower our target P/E to 0x, below MSH’s historical average range since the stock listing owing to potantial risks from the rising discount rate. With an expected cash dividend of VND 2,500/share in the next 12 months, it implies a total return of 14%, based on the closing price of Dec 14 2022.
Song Hong Garment JSC is a Vietnam-based company textile company primarily engaged in the manufacturing of garments and bedding products. The Company operates its production facilities in the province of Nam Dinh and exports its products to international markets, namely USA and Europe.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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