PTB – Maintain earnings growth momentum – Update

• PTB posted 1Q22 revenue of VND1,696bn (+23.1% yoy) and net profit of VND145bn (+43.0% yoy), fulfilling 21.2%/23.3% our full year forecast.
• We forecast PTB’s NP to reach VND620bn (+21.2% yoy)/VND702bn (+ 13.1% yoy) in FY22/23F, respectively.
• Reiterate Add rating with higher TP of VND93,700.

Strong earnings growth momentum in 1Q22
PTB posted 1Q22 revenue of VND1,696bn (+23.1% yoy) and NP of VND145bn (+43% yoy), fulfilling 21.2% and 23.3% our full year forecast. Wood revenue edged up 18% yoy, to VND952bn thanks to strong demand from the U.S market. Stone revenue declined 1.4% yoy due to slowly recovering domestic demand and COVID-19 delayed PTB’s capacity expansion. Car distribution revenue soared 27.9% yoy in 1Q22, achieving VND261bn thanks to the discount registration tax policy. Besides, PTB recorded VND147bn revenue from PT Residence in 1Q22.

Bright prospective thanks to the wood segment
Despite the risk of demand decline due to the slowdown in the housing sector in the U.S, PTB’s customer demand remains high in 4M22. Currently, PTB has received customer orders for delivery until the end of Sep-22. We expect PTB’s GM to improve in 2H22 vs. 1Q22 thanks to the decrease in material wood and economic of scales. Overall, we forecast PTB’s GM to reach 22.0% in FY22 (-0.4% pts). Additionally, the Phu Cat 3 factory is expected to be inaugurated in 4Q22F and come into commercial operation in 1Q23F, bringing PTB’s total wood working capacity to 102,000m3/year in 2023 (+21% vs. 2022). We forecast PTB’s wood segment to reach VND4,056bn (+18.2 yoy)/VND4,783bn (+17.9% yoy) in FY22/23F, respectively.

Reiterate Add rating with higher TP of VND93,700
We reiterate ADD with a SOTP- based TP of VND93,700. We change valuation based from rolling over to mid FY23F with one-year vision. We like PTB for 2022-2023 investment horizon thanks to (1) positive FY22-23 revenue growth of both wood (+18.2%/+17.9%yoy) and stone segments (+31.4%/31.1% yoy), (2) the handover of remaining condo projects, and (3) core profit could maintain double digit growth of 15.7%/30.4% in FY22-23F. PTB is currently trading at FY22/23F forward P/E of 7.9x/6.9x, which is 16.8%/27.3% discount to 1-year average P/E. Thus, we reiterate Add rating.

Re-rating catalysts and downside risks
Re-rating catalyst is sustained strong U.S housing market that will buoy wooden furniture export. Downside catalyst include 1) higher than expected logistic cost and wood material may affect the PTB’s GM and 2) The U.S initiated an investigation into wooden cabinets from Vietnam that may affect PTB’s wood export revenue.

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