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VNM – 2022 AGM key takeaways – AGM Note

Company Note 26/04/2022    82

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  • FY22F business plan was approved by the AGM with VND64,070bn (+5.0% yoy) in revenue and VND9,720bn in net profit (-7.7% yoy).
  • Investors’ question at VNM’s AGM mainly revolved around its expansion strategy in overseas market, input material price, and growth potential in domestic market.

Market Price

Target Price

Dividend Yield

Rating

Sector

VND75,900

VND110,000

5.27%

ADD

CONSUMER GOODS

FY22F business plan is prudent, in our view

  • FY22F business plan was approved by the AGM with VND64,070bn (+5.0% yoy) in revenue and VND9,720bn in net profit (-7.7% yoy).
  • The company focus on organic products and re-boost the School milk program as students come back to school.
  • In 2021, VNM has tapped into two new countries, bringing the presence of Vinamilk products in 57 countries. FY21F export turnover was about US$2.6bn (+8.0% yoy). FY22F export revenue is expected to grow 5-10% yoy.
  • FY22F net profit target slides 7.7% yoy following the concerns over rising raw material prices, including whole milk powder and sugar. According to management, VNM has fixed whole milk powder price contracts until Aug 2022. We estimate that FY22 whole milk powder input cost is likely 6% higher than the same period last year. Whole milk powder increased 17.7% yoy in 1Q22 but cooled down by 6.6% mom in Apr 2022. We believe that the company took advantage of this opportunity to lock input milk prices until Aug and keep observing the whole milk price movement to come up with reasonable pricing options.
  • Per our estimate, VNM’s average selling prices has lifted by nearly 2% in 1Q22. The company has no plan to increase selling prices until the end of 2022F.
  • FY22F revenue guidance is equivalent with our forecast while FY22F net profit guidance is 10.9% below our forecast. We expect whole milk powder price to gradually cool down in 2H22F, improving VNM’s GM by 0.5% pts in FY22F. Thus, we expect VNM’s NP to increase slightly to VND10,905bn in FY22F (+3.5% yoy).

FY22F dividend plan

  • VNM is likely to maintain FY22F cash dividend plan at VND3,850/share which will provide an attractive dividend yield of 5.27% so far. The first FY22 cash dividend of VND1,500/share will be paid in Aug 2022.
  • Responding a shareholder’s question, management said that it has no plan to buy treasury shares.
    Seeking new growth potential via M&A and joint venture
  • According to management, Vietnam dairy market value has increased by 1% yoy in 2021 and still has potential upside following the GDP growth. The dairy market value is expected to reach VND136,000bn by 2025. Thus, VNM aims a revenue CAGR of c.10.3% in the next three years in order to reach VND86,000bn by FY25F.
  • In addition, VNM is still looking for M&A opportunities in the FMCG industry related to nutrition to seek new growth potential.

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