PTB – Strong in FY21, stable in FY22 – Initiation

• PTB becomes one of the ten largest wood exporters in Vietnam, accounting for nearly 1% of Vietnam’s furniture exports in 2020.
• We expect FY21F/22F NP to surge 51.9%/19.9% yoy thanks to strong growth from wood segment and contribution from real estate revenue.
• Initiate coverage with an Add rating and SOTP-based TP of VND129,700.

Riding on the recovery of domestic and global housing market

We like PTB for its growth potential of two core businesses including wood and wood furniture (W&WF) and stone segments, which are both taking advantage from the export and domestic market given the recovery of the domestic and international housing market post-Covid-19. We believe that PTB is well-positioned to enjoy the growth prospects of the industries. In particular, PTB plans to raise its stone/wood capacity by 25%/60% by FY22/23F compared with FY21. Thus, we expect the company to achieve wood/stone revenue CAGR of 13.0%/14.5% in FY20-26F period.

Condo project in Binh Dinh brings short-term catalyst in FY21-22F

PTB is developing a condo project – the Phu Tai Residence – in Quy Nhon, Binh Dinh Province. In Oct 2020, PTB held a topping out and sales event this project. Per company management, the project’s construction progress is on track for handover in 2H21. Accordingly, we expect this project will record revenue of VND600bn and VND653bn in FY21F and FY22F, respectively.

Earnings still grow stably in FY22F after a strong surge in FY21F

We expect PTB’s FY21F revenue and NP to grow respectively by 26.1% and 51.9% yoy from FY20 low-base thanks to 29.4% growth in W&WF revenue and great contribution of VND600n from Phu Tai Resident project with high GPM. For longer term, we believe PTB to maintain its earning growth trajectory in two core businesses in FY22/23F (13.2%/19.8% yoy in W&WF NP and 30.8%/28.5% yoy in stone NP). Besides, handover from residential projects will contribute VND135bn to FY22F NP. As a result, we expect PTB’s NP CAGR to reach 15.6% in FY22-23F.

Initiate coverage with an Add rating and SOTP-based TP of VND129,700

We initiate coverage of PTB with an Add rating and SOTP-based TP of VND129,700. Re-rating catalyst is the strong housing demand in the US that leads to higher-than-expected demand for PTB’s wooden furniture. Downside risks including 1) the prolonged Covid-19 pandemic with a more extended social distancing period may delay delivery time to PTB’s customers, thus hitting PTB’s performance directly and 2) weak domestic construction activities and car consumption due to adverse macro situation and sluggish new business execution (real estate and quartz).

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