ACV – Arising uncertainties might hinder the recovery – Update

• ACV posted VND7,784bn in FY20 revenue and VND1,718bn in FY20 NP, fulfilling only 77.8% of our forecasts due to higher than expected FX loss.
• In Dec 2020, the Prime Minister approved to allow ACV to manage airfield assets, which will open door for ACV to list on the main bourse.
• Reiterate ADD but lower TP by 0.8% to VND87,500 following a downward adjustment of total pax throughput in FY21-23F.

FY20 results were lower than our expectation due to heavy FX loss

In 4Q20, quarterly domestic pax throughput surpassed pre-outbreak level by 2.3% yoy and increased 30.8% qoq. Meanwhile, international air travel still froze. 4Q20 revenue and net profit dropped 64.8% yoy and 84.6% yoy, respectively but net profit improved 149.8% qoq on a low-base 3Q20.

For FY20, total pax throughput slumped 37.8% yoy to 63.9m in which domestic pax dropped 22.5% yoy while international pax tumbled 78.5% yoy, leading to a 57.5% yoy drop in FY20 revenue and a 79.0% yoy decrease in net profit. ACV’s 2020 NP completed only 77.8% of our forecast due to higher-than-expected FX loss from JPY appreciation against VND.

We lower pax throughput forecasts in FY21-23F

We lower FY21-23F domestic pax throughput forecast by 0.8%/0.7% to reflect the Covid-19 outbreak in late Jan-2021. We lower FY21-23F international pax throughput forecast by 29.5%/3.2% to reflect the slower reopening of Vietnam’s border. In FY23F, we expect domestic traffic to equal to 119.7% of the 2019 base while international traffic would equal to 93.8% of the 2019 base.

ACV was officially assigned to manage the airfield assets

In Dec 2020, the Prime Minister approved ACV to manage the airfield assets, including 22 airports in Vietnam until Dec 2025. In our view, this helps ACV in: 1) eliminating the qualified opinions in its audited annual reports, which was the bottleneck for ACV to list on the main bourse, and 2) ACV will be active in managing and maintaining the airfield assets to ensure the traffic growth in the coming years.

Reiterate ADD but lower TP by 0.8% to VND87,500

We reduce FY21F EPS by 15.5% but increase FY22-23F EPS by 3.5%/0.7% due to the downward adjustment of total pax throughput and the adjustment of disbursement progress of Long Thanh International Airport (LTIA). Downside risks include 1) a longer-than-expected Covid-19 pandemic, 2) a stronger-than-expected JPY vs VND, and 3) slower-than-expected construction of LTIA.

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