PHP – The best is yet to come – Update

• In 2Q21, PHP’s net profit (NP) rose 26.0% yoy to VND156bn. 1H21 NP grew 35.6% yoy, fulfilling 62.3% of our full-year forecast.
• We raise FY21/22/23F EPS forecasts by 21.4%/16.6%/24.3% to reflect our expectation of higher container volume growth.
• Reiterate Add with a higher SOTP-based target price (TP) of VND29,200.

Better-than-expected 2Q21 results
In 2Q21, PHP’s net revenue increased 22.7% yoy to VND628bn thanks to buoyant container volume throughput (+26.2% yoy) following increasing sea freight demand. Gross profit margin expanded 1.5% pts yoy on higher economies of scales. Income from associate companies hiked +86.2% yoy to VND13bn in 2Q21 regarding to growing cargo volume through Hai Phong port cluster. Consequently, 2Q21 net profit increased 26.0% yoy to VND156bn, bringing 1H21 net profit to 35.6% yoy, fulfilling 62.3% of our full-year forecast.

Hoang Dieu port relocation is still near-term catalyst
In short-term, we believe two other catalysts that would positively affect PHP including: (1) Hoang Dieu port relocation plan might be approved within 2021 following the construction progress of Nguyen Trai bridge, which has completed the necessary procedures and about to start at end-2021, and (2) we expect the government to approve the seaport services fee increase in 2022F.

The new deep-sea port is growth engine in longer run
Giving Hai Phong port cluster’s prime location, we expect PHP’s container volume to grow 19.7% yoy in FY21F. However, PHP’s current ports are running close to their designed capacity (about 106% at end-FY21). Thus, we forecast PHP’s container volume to slow down to 6.3%/4.1% yoy during FY22-23F. PHP is going to invest the new deep-sea port in Hai Phong Int’l Gateway Port (HIGP) which will enhance its capacity by 52.4% to 3,200,000 TEUs p.a. With the inauguration of Wharf No.3 in 3Q23F and Wharf No.4 in 3Q25F, we expect PHP’s container volume to rise steadily at 9.5% CAGR over FY24-27F.

Reiterate Add with higher SOTP-based TP of VND29,200
We raise our FY21/22/23F EPS by 21.4%/16.6%/24.3% on the back of higher container volume throughput via PHP’s ports. Downside risks include (1) uncertainties arising from global pandemic or crisis that could disrupt global trade may directly affect PHP’s financial results through lower-than-expected cargo volume throughput and lower-than-expected cargo services price, and (2) longer-than-expected deep-water port completion time. Re-rating catalysts include (1) higher-than-expected cargo volume and services price of PHP’s ports, and (2) Hoang Dieu port relocation plan and seaport fee increase proposal is approved

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