VNM - Expecting a Recovery
The decline in the demand of dairy products and the fluctuation of raw material prices negatively affects VNM’s earnings. However, we believe that VNM has adopted the right strategies that will boost its revenue in both domestic and export markets. In the long run, VNM is still a promising stock with a healthy financial structure, a low debt ratio (1.6%) and a large amount of cash. This will be the key catalyst for its M&A activities in order to expand its scale and increase its competitiveness in the market.
We combine two valuation methods: FCFF and P/E to evaluate VNM’s fair value. The conclusion is that the stock is worth VND 141,800/share and anticipate a cash dividend of VND 3,000 per share in the next 12 months, which results in a 6.5% total return from the closing price on September 17th, 2018. Therefore, we recommend ACCUMULATE on this stock.
Vietnam Dairy Products Joint Stock Company (Vinamilk) is a Vietnam-based company engaged in the food processing industry. It is involved in the manufacturing, marketing and distribution of dairy products, such as milk of various forms and milk derived products, as well as confectioneries and non-alcoholic beverages. The Company also provides packaging and logistics services, along with other technical support to cultivation and breeding processes to farmers.
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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