ACV – Ready for take off – Update

• In 4Q21, ACV’s net profit (NP) dropped 28.1% yoy to VND200bn. FY21 NP plunged 69.7% yoy to VND499bn.
• We expect ACV’s total pax throughput to strongly rebound 193.7%/21.6%/ 9.4% in FY22-24F following government’s plan to resume the air traffic.
• Reiterate Add with higher DCF-based target price of VND117,800.

FY21 results saved by financial income
In 4Q21, ACV’s total pax throughput is estimated to plunge 74.0% yoy as the domestic air traffic was limited due to the severest Covid-19 outbreak while the international traffic is still frozen, leading to the 43.0% yoy drop in revenue. 4Q21 net financial income hiked 201.1% yoy mainly due to VND522bn FX gain from JPY depreciation against VND in 4Q21 while in 4Q20, ACV recorded FX loss of VND211bn. 4Q21 G&A expenses increased 154.8% yoy as ACV booked provision of VND349bn for receivables from the airlines. As a results, 4Q21 NP dropped 28.1% yoy to VND200bn.

For the whole FY21, ACV’s total pax throughput is estimated to slump 48.2% yoy to 32.5m pax, in which domestic pax dropped 43.9% yoy while international pax plunged 95.6% yoy. ACV’s FY21 revenue dropped 38.7% yoy and FY21 NP dropped 69.7% yoy to VND499bn, mostly thanks to net financial income and FX gain of VND3,045bn (+141.1% yoy), fulfilling 31.7% of our full-year forecast.

F22-24F outlook: ready for skies reopening

We expect the domestic pax throughput to increase 155.3% yoy in FY22F as the country is stepping into “normalized” with recovering travel demand. In 2023-24F, the domestic pax may return to normal growth of 7.6%/7.9% yoy. We expect ACV’s international pax to reach 13.1m pax in FY22F (versus 0.2m pax in FY21) and may increase 110.3%/14.3% in FY23-24F as Vietnam international traffic may come back to normal operations in the second half of FY22F following the government’s plan to resume international flights.

Reiterate Add with higher DCF-based TP of VND117,800

We revise up our TP for ACV up 36.3% yoy as (1) we roll forward our DCF valuation to FY22F, and (2) we revise down FY22F EPS by 18.7% but revise up FY23-24F EPS by 20.3%/20.8% due to higher international pax expectation and cost structure update from latest financial report. Potential re-rating catalysts include (1) international air traffic is fully re-opened, (2) dividend plan is announced, and (3) listing on the main bourse is approved. Downside risks include (1) uncertainties arising from the Covid-19 pandemic, (2) a stronger-than-expected JPY vs VND, and (3) slower-than-expected construction of Long Thanh International Airport.

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