Hoa An JSC (DHA) [NOT RATED] Company Visit Note

Industry: Materials 2020 2021 2022

60%
Report Date: February 16, 2023 Rev Growth 15.4% -11.8% 14.9% 40%
Current Price: VND38,000 EPS YoY 51.6% -8.2% -42.9% 20%
Dividend Yield*: 7.9% GPM 31.8% 28.2% 26.5% 0%
* Dividend Yield based on 2022 DPS NPM 25.7% 26.7% 13.5% -20%
EV/EBITDA* 4.1x 2.3x 2.8x -40%
ROE 24.1% 20.1% 11.5% -60%
PER* 7.4x 6.1x 10.5x Feb-21 Aug-21 Feb-22 Aug-22 Feb-23
* Valuations based on historical share prices — except 2022,
DHA VN-INDEX
which is based on current share price

DHA Peers VNI Company Overview

Market Cap: USD23.3mn PER (ttm) 10.5x 10.5x 13.5x Hoa An JSC (HOSE: DHA) is Vietnam-based
Foreign Room: USD6.7mn P/B (curr) 1.2x 1.1x 1.7x construction stone manufacturer in the Southern Key
Economic Region. DHA manages three stone
ADTV30D: USD0.1mn Net D/E -0.6x 0.1x N/A quarries in Dong Nai and Binh Phuoc with total
State Ownership: 24.9% ROE (ttm) 11.5% 7.6% 14.1% exploitation capacity of 1.6 million cbm p.a.
Outstanding Shares: 14.73mn ROA (ttm) 10.2% 4.2% 2.2%

Anh Tong Stronger construction stone demand to support earnings

Senior Analyst
anh.tong@vcsc.com.vn • Hoa An JSC (HOSE: DHA) is one of the leading construction stone manufacturers in Vietnam’s
+84 28 3914 3588 ext. 366
Southern Key Economic Region.
Duc Vu • DHA manages three stone quarries with a total mining capacity of 1.6 million cbm p.a. — the
Associate Director Thanh Phu 2 quarry & Tan Cang 3 quarry in Dong Nai and the Nui Gio quarry in Binh Phuoc.
duc.vu@vcsc.com.vn • The Thanh Phu 2 quarry was DHA’s largest revenue contributor in 2022 (47%), followed by the
+848 3914 3588 ext. 363
Tan Cang 3 quarry (36%) and Nui Gio quarry (17%).
• Despite 15% YoY revenue growth in 2022, DHA’s NPAT-MI fell 42% YoY. This decline was
primarily due to a VND27bn increase in provision for financial investment (see page 7).
• In 2023F, we anticipate stronger construction stone demand due to the acceleration of transport
infrastructure budget disbursement.
• We believe DHA will benefit from its large reserve of high-quality stone, longstanding mining
licenses and proximity of its quarries to major transport infrastructure projects.
• DHA’s TTM PER of 10.5x is in line with our selected peer group median of 10.5x (see page 11),
and its YE 2022 net cash and short-term investments represent ~50% of its current market cap.
• DHA has a history of a paying cash dividends with DPS of VND3,000-5,000 in 2019-2022.
• Key risks: (1) Slower-than-expected fiscal budget disbursement; (2) potential losses from financial
investment in equities (see pages 7 & 11).
Stronger construction stone demand from the acceleration of public budget disbursement.
Construction stone is required at the beginning of a transport infrastructure project. We thus
anticipate demand for construction stone to increase after projects start. Based on the estimate of
the Ministry of Transport, we forecast total construction stone demand from major projects at around
84 million cbm in 2023-2028F (see page 9).
We anticipate DHA to benefit from surging construction stone demand due to (1) the proximity
of its mines to key transport infrastructure projects, (2) its high-quality stone mines with long-term
reserves and (3) strong mining capacity. Both DHA’s Tan Cang 3 quarry and Thanh Phu quarry are
among the closest quarries to major infrastructure projects such as the Long Thanh International
Airport and the North-South Expressway. While transportation costs are expensive due to our
outlook of oil prices remaining high over the short term, DHA’s advantageous locations should
strongly support it in winning project contracts. In addition, the licenses of some surrounding mines
are expiring; therefore, we believe DHA should be one of the most competitive construction stone
suppliers as it has high-quality stone quarries with a mining period of another six to 15 years.

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 Table of Contents

Stronger construction stone demand to support earnings ............................................................... 1

Company Overview .......................................................................................................................... 3

Management and ownership structure .......................................................................................... 3

Three high-quality stone quarries in strategic locations ................................................................ 3
Large reserve of high-quality stone and long mining terms...................................................... 3
Strategic locations in region with extensive construction activities .......................................... 5

Historical Performance ..................................................................................................................... 5

2022 Recap: Surging financial expenses caused NPAT to drop 42% YoY .................................. 7

Outlook ............................................................................................................................................. 9

Strong demand for construction stone .......................................................................................... 9

DHA to benefit due to its competitive stone mines ....................................................................... 9

Valuation ........................................................................................................................................ 11

Investment Risks ............................................................................................................................ 11

Financial Statements ...................................................................................................................... 12

VCSC Rating System ..................................................................................................................... 13

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 Company Overview
Hoa An JSC (HOSE: DHA) was established in 1978 as Hoa An Rock Enterprise and was
transformed into joint stock company in 2000. With its main businesses of mine exploitation and
construction material processing, DHA currently manages three stone quarries with an annual
exploitation capacity of 1.6 million cbm. Its stone quarries include the Nui Gio quarry in Binh Phuoc
Province, the Thanh Phu 2 quarry in Vinh Cuu District, Dong Nai Province and the Tan Cang 3
quarry in Bien Hoa, Dong Nai Province. DHA was listed on HOSE in 2004.

Management and ownership structure

Fico Corporation JSC (UPCoM: FIC) is the largest shareholder with a 25% stake (Figure 1).
FIC is a State-owned construction material conglomerate. FIC’s General Director Mr. Cao Truong
Thu is also DHA’s chairman. DHA’s second largest shareholder is Ms. Vuong Ngoc Tuyet (4.8%),
followed by the Luxembourg-based Templeton Frontier Markets Fund (4.8%), DHA management
board member Mr. Nguyen Tan Loc (4.8%) and PXP Vietnam Fund Limited (3.3%).
Figure 1: DHA’s ownership structure
KEY MANAGEMENT Ownership structure by type
%
Names Position

Mr. Cao Truong Thu Chairperson

Mr. Trinh Tien Bay General Director Major

shareholders
Mr. Nguyen Van Luong Deputy General Director Others 43%
57%
Mr. Do Van Ngoc Chief Accountant

MAJOR SHAREHOLDERS
Shares,
Holders %
Thousand
State-owned
Fico Corporation JSC (UPCoM: FIC) 3,758 24.9% 25%
Ms. Vuong Ngoc Tuyet 724 4.8%
FTIF - Templeton Frontier Markets Fund 721 4.8% 57%
18%
Mr. Nguyen Tan Loc 718 4.8%
Others
PXP Vietnam Fund Limited 500 3.3%
Foreign-owned

Source: DHA, FiinPro, VCSC (shareholder data as of June 2022)

Three high-quality stone quarries in strategic locations

DHA is one the leading construction stone manufacturers in the HCMC – Dong Nai – Binh
Duong region. According to management, DHA’s share in the construction stone market of this
region is 10%-15%. This position is due to three key competitive advantages of DHA’s stone
quarries: (1) large reserves of high-quality stone, (2) longstanding mining licenses and (3) strategic
locations.
Large reserve of high-quality stone and long mining terms
DHA’s total remaining reserve is around 20 million of cbm stone, and the company has
mining licenses for the next six to 15 years (Figure 2). In 2019-2021, DHA was approved to
extend the mining licenses of the Tan Cang 3 and Nui Gio quarries until 2028-2038 and increase
the remaining reserve of these two quarries by 2-4 million cbm. As of January 1, 2022, the Tan
Cang 3 quarry had the largest remaining reserve among DHA’s quarries at ~10 million cbm of stone,
followed by the Nui Gio quarry with 5 million cbm of stone and the Thanh Phu 2 quarry with 4.6
million cbm of stone. DHA’s total mining capacity is around 1.6 million cbm/year, and the mining
capacity of the Thanh Phu 2 quarry of 818,000 cbm/year is double DHA’s two other quarries.

See important disclosure at the end of this document www.vcsc.com.vn | VCSC<GO> February 16, 2023 | 3
 Figure 2: DHA’s three stone quarries
Remaining Last year of
Total licensed Mining capacity
Quarry Location reserve* mining
mining area (ha) (cbm/year)
(cbm) license

Nui Gio Hon Quan, Binh Phuoc 18.5 5,129,550 300,000 Aug. 2038

Tan Cang 3 Bien Hoa, Dong Nai 21.7 10,081,689 488,000 Jun. 2037

Thanh Phu 2 Vinh Cuu, Dong Nai 20.0 4,651,092 818,000 Dec. 2028

TOTAL 60.2 19,862,331 1,606,000

Source: DHA, VCSC. * Note: Data as of January 1, 2022.

High-quality stone. DHA’s main products are 1x1 and 1x2 construction stone, which are primarily
used for traffic construction (Figure 3). The company has three stone production lines in each
quarry and normally sells its stone products directly at the quarry to its customers. Among the three
quarries, the stone selling prices at the Nui Gio quarry are highest at an average selling price (ASP)
of VND174,000/cbm in 2016-2021 vs VND145,000/cbm of the Thanh Phu 2 quarry vs
VNDVND150,000/cbm of the Tan Cang 3 quarry (Figure 4). According to management, the higher
ASP of the Nui Gio quarry is due its larger proportion of 1x2 stone that has higher selling prices and
better-quality compared to DHA’s two other quarries and the surrounding competitors in Binh Phuoc
Province. Most quarries in Binh Phuoc Province are less competitive than DHA’s Nui Gio quarry as
they have lower quality stone, smaller mining capacities (less than 50,000 cbm/year) and shorter
mining periods (less than three years), per management.
Figure 3: DHA’s stone products

Size Selling prices

Product Usage
(mm) (‘000 VND/cbm)
For construction of high-rise buildings,
1x1 stone 10 x 10
airport runways, wharfs, and highway
For construction of high-rise buildings,
1x2 stone 10 x 25
airport runways, wharfs, and highway
For road construction and house
0x3 stone 5 x 30
foundations
For road construction and house
0x4 stone 5 x 40
foundations
For road construction, and factory &
4x6 stone 40 x 60
building foundations
For road construction, and factory &
5x7 stone 50 x 70
building foundations
Mainly used as aggregate for road
Crushed stone –
construction and maintenance
0 50 100 150 200 250 300 350

Source: DHA, VCSC

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 Figure 4: DHA’s average selling prices (ASPs)
VND thousand/ cbm
190
180 Nui Gio Quarry
170 Blended ASP
160 Tan Cang 3 Quarry

150 Thanh Phu 2

140
130
120
110
100
2016 2017 2018 2019 2020 2021 2022

Source: DHA, VCSC. Note: 2022 ASP by quarry is not available.

Strategic locations in region with extensive construction activities

Figure 5: DHA’s quarry locations

BINH PHUOC
Nui Gio quarry

Thanh Phu 2 quarry

HCMC Tan Cang 3 quarry

DONG NAI

Source: DHA, VCSC

DHA’s three quarries are located in a region with extensive construction activities. DHA’s
stone quarries are located in Dong Nai and Binh Phuoc — two of the major industrial hubs of
Vietnam’s Southern Key Economic Region (SKER). The Tan Cang 3 quarry is located in Bien Hoa,
Dong Nai Province, which is only a one-hour drive from HCMC. The Thanh 2 quarry, which is DHA’s
other quarry in Dong Nai Province, is 28-km away from the Tan Cang 3 quarry and close to the
Dong Nai River. The positions of these two quarries are convenient for road transportation (for the
Tan Cang 3 quarry) and river transportation (for the Thanh Phu 2 quarry) to the commercial center
of HCMC and other southeastern provinces. Meanwhile, the Nui Gio quarry is located in Hon Quan
District, Binh Phuoc Province and close to National Highway 13 — a key connection between
Vietnam’s southern highlands to HCMC, Cambodia, Laos and Thailand. According to DHA, the Nui
Gio quarry mainly serves rising demand for construction stone in Binh Phuoc and Tay Ninh.

Historical Performance
The Thanh Phu 2 quarry was DHA’s largest revenue contributor at an average of 51% in 2019-
2022. In 2022, the Thanh Phu 2 quarry accounted for 47% of revenue, followed by the Tan Cang 3
quarry (36%) and Nui Gio quarry (17%) (Figure 6).

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 Figure 6: DHA’s stone production output vs revenue

Million cbm VND bn

600
2.5
500
2.0
400
1.5
300
1.0
200

0.5 100

0.0 0
2016 2017 2018 2019 2020 2021 2022

Total production output (LHS) Revenue of Tan Cang 3 quarry (RHS)

Revenue of Nui Gio quarry (RHS) Revenue of Thanh Phu 2 quarry (RHS)

Source: DHA, VCSC

DHA had an average GPM of 30% in 2016-2022. Thanks to its competitive advantages, DHA was
able to maintain its GPM above 27% over the last seven years. In 2022, DHA’s GPM was 27%,
which is relatively high compared with its listed competitors in the SKER (Figure 7).
Figure 7: GPM of listed stone manufacturers in the SKER
Total mining capacity 2022 GPM
Company (mn cbm) (%)

Cuong Thuan IDICO Development Investment Coporation

2.8 50%
(HOSE: CTI)
Binh Duong Mineral and Construction JSC
3.3 37%
(HOSE: KSB)

DHA 1.6 27%

Nui Nho Stone JSC

1.0 25%
(HOSE: NNC)
Bien Hoa Building Materials Production & Construction JSC
5.7 24%
(UPCoM: VLB)
Dong Nai Material & Building Investment JSC
1.4 15%
(UPCoM: DND)
CIC39 Corporation
1.0 13%
(HOSE: C32)

Source: DHA, VCSC

Strong cash position. As of YE2022, DHA reported zero debt while its cash and short-term
investments amounted to VND284bn — equivalent to 58% of the company’s total assets, 64% of
total equity and ~50% of current market cap. As mentioned earlier, DHA usually sells its stone
products directly at the quarry; therefore, its inventory and AR were low at VND65mn and VND74bn
as of YE2022, respectively. This strong cash position provides the company with great advantages
— especially amid the recent rising interest rate environment. Sufficient cash also allows DHA to
maintain its payout ratio at an average of 81% in 2019-2022.

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 2022 Recap: Surging financial expenses caused NPAT to drop 42% YoY
Figure 8: DHA’s net financial expenses & short-term investment
Net financial income (expenses) (VND bn) 2021 2022

Financial expenses (4.7) 32.6

Provision for financial investment 5.8 32.5

Reversal of financial investment provision (10.7) (0.0)

Other financial expenses 0.2 0.1

Financial income 26 11

Net financial income (expenses) 30 (22)

Short-term investment (VND bn) YE21 YE22

ST investment securities 23.5 88.5

Hoa Phat Group JSC (HOSE: HPG) 15.3 80.3

Thanh Thanh Joint Stock Co (HNX: TTC) 6.0 6.0

Other ST investment securities 2.1 2.1

Savings deposits 163.0 170.0

Provision for ST investment (3.2) (35.7)

TOTAL 183.2 222.9

Source: DHA, VCSC

Financial expenses jumped 8x YoY in 2022. Despite zero interest expenses, DHA’s financial
expenses surged from -VND5bn in 2021 to VND33bn in 2022 (Figure 8) primarily due to a VND27bn
increase in provision for financial investment.
As of YE2022, DHA’s short-term investments amounted to VND223bn, of which VND170bn was in
bank deposits and the remaining was for investment securities (Figure 8). In 3Q 2022, DHA
aggressively bought more shares of Hoa Phat Group (HOSE: HPG), increasing its number of shares
from 300,000 as of YE2021 to 2.64 million shares as of YE2022 — equivalent to a total value of
VND80bn (91% of DHA’s total securities investments). However, HPG’s share price bottomed in
late November 2022, causing substantial losses for DHA. As a result, the company had to book a
provision for financial investment of VND33bn at YE2022.
DHA’s 2022 NPAT-MI was VND52bn (-42% YoY). Despite a 9% increase in operating profit, DHA
reported a reduction in its bottom line that was primarily due to rising financial expenses. At the
company’s April 2022 AGM, DHA issued guidance for 2022G revenue and NPAT of VND341bn and
VND72bn, respectively. While DHA exceeded its 2022G revenue by 14%, it only completed 73% of
its 2022 NPAT target.

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 Figure 9: DHA’s 2021-2022 results
VND bn 2021 2022 YoY VCSC’s comments

Net revenue 337 388 14.9%

COGS -242 -285 17.6%
Gross profit 95 103 8.2%

SG&A expense -16 -17 4.5%

Operating profit 79 86 8.9%

Net financial income (expenses) 30 -22 N.M.
Associates 0 0 N.M.
Other income (expenses) 3 1 -79.0%
PBT 112 65 -41.8%
Tax expense -22 -13 -41.1%
NPAT-MI 90 52 -42.0%

Dropped primarily due to rising

GPM 28.2% 26.5% -1.7 ppts
oil prices.
NPM 26.7% 13.5% -13.3 ppts
Note: Figures may not sum up due to rounding.
Source: DHA, VCSC

Figure 10: DHA’s guidance for 2022G

Unit 2022G

Production output cbm 2,120,000

%YoY growth % -0.9%

Revenue VND bn 341

%YoY growth % 1.1%

NPAT VND bn 72

%YoY growth % -20.2%

Dividend VND per share 3,000-5,000

Dividend % par value 30-50%

Source: DHA, VCSC

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 Outlook
Strong demand for construction stone
Transport infrastructure budget disbursement to accelerate in 2023F. As discussed in the
transportation section of our 2023 Strategy Report, major projects such as the North-South
Expressway Phase 1 & Phase 2 and Long Thanh International Airport (LTA) Phase 1 started
construction in December 2022. Notably, 11 subprojects of the eastern section of the North-South
Expressway – Phase 1 (total length of 658 km) are expected to be completed in 2022-2024. For
Phase 1, we estimate there will be 169 km and 171 km completed in 2023 and 2024, respectively.
In addition, the construction of Phase 2 of the North-South Expressway began at the beginning of
2023. We anticipate Phase 2 to being finished by 2025 at the soonest. Moreover, according to the
initial timeline of LTA Phase 1, this project is expected have its construction completed by late 2025.
Stronger construction stone demand from the acceleration of public disbursement.
Construction stone is a material required at the beginning of a transport infrastructure project. As a
result, we anticipate demand for construction stone will increase right after projects start. Based on
an estimate from the Ministry of Transport (MoT), we forecast total construction stone demand from
major projects to amount to around 84 million cbm in 2023-28F (Figure 11).
Figure 11: Estimated construction stone demand of major transport infrastructure projects
Total construction
Total investment
Project Timeline stone demand
(VND tn)
(million cbm)
Long Thanh International Airport – Phase 1 109 2021-2025 ~24
North-South Expressway subprojects - Phase 1 90 2019-2024 N/A
North-South Expressway subprojects - Phase 2 147 2023-2025 18.5
Hanoi Ring Road 4 86 2023-2026 4.4
HCMC Ring Road 3 75 2023-2026 4.4
Khanh Hoa - Buon Ma Thuot Expressway – Phase 1 22 2023-2027 0.9
Bien Hoa - Vung Tau Expressway Phase 1 18 2023-2025 0.7
HCMC Ring Road 4 100 2024-2028 11.6
TOTAL 83.9
Source: MoT, VCSC

DHA to benefit due to its competitive stone mines

We anticipate DHA to benefit from the surging construction stone demand due to (1) the
proximity of its mines to key transport infrastructure projects, (2) its high-quality stone mines with
long-term reserves and (3) strong exploitation capacity.
As a result of its proximity to major transportation infrastructure projects, DHA will likely win
construction stone supply contracts for these projects. While transportation costs will be
expensive due to our forecast of oil prices remaining high over the short term, we believe the
proximity of DHA’s quarries to transportation infrastructure projects will be beneficial. For example,
DHA’s Tan Cang 3 quarry is 25 km away from the LTA project, which is closer than surrounding
quarries such as Dong Nai Material & Building Investment JSC (UPCoM: DND)’s Tan Cang 5 quarry
(29 km) and the Tan Cang 6 quarry of the Dong Nai Union of General Agricultural Service
Cooperatives (Donacoop) (30 km) (Figure 12). DHA’s other quarry in Dong Nai Province — the
Thanh Phu quarry — is also close to other major transport infrastructure projects in the Mekong
Delta region such as the Can Tho – Ca Mau subproject of the North-South Expressway Phase 2.
While construction stone supply is limited, DHA should benefit due to its high-quality stone
quarries with long-term reserves and strong mining capacities. According to DHA, due to the
opposition of the local residents regarding the effects of mines on the surrounding environment, it
is now harder for mining companies to get approval to extend their mining period and/or increase
their mining capacity. As licenses of some existing mines in the HCMC – Dong Nai – Binh Duong

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 region are expiring, we believe DHA should benefit due to its high-quality stone mines that have
mining licenses until 2028-2038. In addition, DHA is among the top stone manufacturers with the
highest capacities in the Binh Duong – Dong Nai region.
Figure 12: Distance from LTA and the surrounding quarries

Tan Cang 3 quarry (DHA)

(488,000 cbm/year)

Within 25 km

Within 50 km
Tan Cang 1 quarry (VLB)
(1,500,000 cbm/year)

= Quarry name (Company) (bubble size represents the equivalent mining capacity of the quarry)

Source: DHA, VCSC

We believe stronger construction stone demand from the disbursement of public transport
infrastructure budget will substantially support DHA’s earnings over the short term. In
particular, we expect the LTA and North-South Expressway projects to be major contributors to
DHA’s revenue in 2023-2025F.

See important disclosure at the end of this document www.vcsc.com.vn | VCSC<GO> February 16, 2023 | 10
 Valuation
For peer references, we select listed Vietnamese construction stone manufacturers that are similar
with DHA.
DHA is currently trading in line with its peer group median TTM PER of 10.5x.
DHA has a history of paying a cash dividends. In 2019-2022, DHA’s DPS ranged from
VND3,000-5,000 — equivalent to average DPS/EPS of 81%.
Figure 13: Peer comparison

Mkt TTM
TTM EPS LQ TTM
cap Sales ROE ROA Net NPM
Company Growth PBR PER
(USD Growth (%) (%) D/E (x) (%)
(%) (x) (x)
mn) (%)

KSB VN Equity 75.7 -2.8% -39.7% 7.0% 3.7% 0.5x 17.7% 0.9x 13.7x
VLB VN Equity 58.0 -15.2% -11.3% 19.6% 18.2% -0.6x 17.1% 2.0x 10.1x
CTI VN Equity 29.6 20.8% -31.7% 8.1% 1.9% 1.9x 9.5% 0.6x 8.0x
NNC VN Equity 17.2 -49.3% 1.8% 12.3% 10.5% -0.3x 48.8% 1.2x 10.3x
C32 VN Equity 12.0 10.8% -65.1% 4.5% 2.6% 0.2x 4.6% 0.5x 10.7x
DND VN Equity 6.7 -14.4% -29.3% 5.8% 4.7% -0.1x 5.6% 1.3x 21.8x
Median 23.4 -8.6% -30.5% 7.6% 4.2% 0.1x 13.3% 1.1x 10.5x

DHA VN Equity 23.3 14.9% -42.0% 11.5% 10.2% -0.6x 13.5% 1.2x 10.5x
Source: Bloomberg, VCSC (data as of February 16, 2023)

Figure 14: DHA’s EPS and DPS

2019 2020 2021 2022
EPS (VND/share) 4,227 6,407 5,884 3,360
DPS (VND/share) 3,000 5,000 5,000 3,000
DPS/EPS (%) 71.0% 78.0% 85.0% 89.3%
Source: DHA, VCSC

Investment Risks
Slower-than-expected fiscal budget disbursement is a key downside risk, in our view. We
believe the acceleration of public transport infrastructure projects is the main story for DHA’s positive
outlook over the next two years. If fiscal spending is slower than expected, then DHA’s revenue will
be negatively affected. In addition, slow budget disbursement for public infrastructure projects could
cause late payments and bad debt, thus disrupting the company’s cash flow.
Risk of losses from investments in equity securities. Despite higher operating profit, DHA’s
securities investments (mainly in HPG) was the key factor that pulled its earnings down in 2022
(see page 7). Given our expectation for Vietnam’s equity market to remain challenging in H1 2023,
these investments could negatively affect DHA’s bottom line.
Currently, HPG’s stock price is VND20,600/share — up 10% vs YE2022. If DHA still owns the same
portfolio as it did at YE2022, HPG's share price movement in 2023 YTD would imply a potential
reversal of provisions on investments in Q1 2023.

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 Financial Statements
P&L (VND bn) 2019 2020 2021 2022 B/S (VND bn) 2019 2020 2021 2022
Revenue 332 382 337 388 Cash & equivalents 69 37 134 61
COGS -229 -261 -242 -285 ST investments 88 194 183 223
Gross Profit 102 122 95 103 Accounts receivable 67 76 72 74
Sales & Marketing exp 0 0 0 0 Inventories 0 0 0 0
General & Admin exp -15 -18 -16 -17 Other current assets 26 12 5 11
Operating Profit 87 104 79 86 Total Current assets 250 319 394 369
Financial income 9 11 26 11 Fixed assets, gross 188 180 182 182
Financial expenses -12 8 5 -33 - Depreciation -110 -115 -124 -129
- o/w interest expense 0 0 0 0 Fixed assets, net 78 65 59 53
Associates 0 0 0 0 LT investments 0 0 0 0
Net other income/(loss) 0 -1 3 1 LT assets other 99 92 79 69
Profit before Tax 84 122 112 65 Total LT assets 177 157 137 122
Income Tax -16 -23 -22 -13 Total Assets 427 475 531 491
NPAT before MI 68 98 90 52
Minority Interest 0 0 0 0 Accounts payable 9 7 10 12
NPAT less MI, reported 68 98 90 52 Short-term debt 0 0 0 0
NPAT less MI, adjusted(1) 62 94 87 49 Other ST liabilities 26 35 47 31
Total current liabilities 35 42 57 43
EBITDA 98 113 91 87 Long-term debt 0 0 0 0
EPS reported, VND 4,227 6,407 5,884 3,360 Other LT liabilities 5 5 6 6
DPS, VND 3,000 5,000 5,000 3,000 Total Liabilities 40 47 63 49
DPS/EPS (%) 71.0% 78.0% 85.0% 89.3%
(1)
Adjusted for bonus & welfare Preferred equity 0 0 0 0
Paid-in capital 151 151 151 151
Share premium 58 58 58 58
RATIOS 2019 2020 2021 2022 Retained earnings 90 132 172 146
Growth Other equity 87 87 87 87
Revenue growth 11.3% 15.4% -11.8% 14.9% Minority interest 0 0 0 0
Op profit (EBIT) growth 13.1% 19.0% -23.6% 8.9% Total equity 387 429 469 442
PBT growth 1.0% 45.0% -7.7% -41.8% Liabilities & equity 427 475 531 491
EPS growth, adjusted 3.4% 51.6% -8.2% -42.9%
Y/E shares out, mn 14.7 14.7 14.7 14.7
Profitability
Gross Profit Margin 30.8% 31.8% 28.2% 26.5% CASH FLOW (VND bn) 2019 2020 2021 2022
Op Profit, (EBIT) Margin 26.3% 27.1% 23.5% 22.2% Beginning Cash Balance 96 69 37 134
EBITDA Margin 29.5% 29.6% 27.0% 22.4% Net Income 68 98 90 52
NPAT-MI Margin 20.5% 25.7% 26.7% 13.5% Dep, & amortization 11 10 9 8
ROE 17.6% 24.1% 20.1% 11.5% Change in Working Cap -21 15 75 -27
ROA 16.1% 21.8% 17.9% 10.2% Other adjustments 1 -18 -36 -49
Cash from Operations 58 106 138 -15
Efficiency
Days Inventory On Hand 0.2 0.1 0.2 0.1 Capital Expenditures, net -1 -1 -3 -1
Days Accts, Receivable 74.2 68.2 79.9 68.8 Investments, net -22 -85 6 -54
Days Accts, Payable 9.3 7.6 9.2 10.5 Cash from Investments -23 -87 3 -55
Cash Conversion Days 65.1 60.8 70.9 58.5
Dividends Paid -52 -52 -44 -3
Liquidity ∆ in Share Capital -10 0 0 0
Current Ratio x 7.2 7.6 6.9 8.6 ∆ in ST debt 0 0 0 0
Quick Ratio x 7.1 7.6 6.9 8.6 ∆ in LT debt 0 0 0 0
Cash Ratio x 2.0 0.9 2.3 1.4 Other financing C/F 0 0 0 0
Debt / Assets 0.0% 0.0% 0.0% 0.0% Cash from Financing -62 -52 -44 -3
Debt / Capital 0.0% 0.0% 0.0% 0.0%
Net Debt / Equity -40.6% -53.9% -67.6% -64.1% Net Change in Cash -26 -33 97 -73
Interest Coverage x N.M N.M N.M N.M Ending Cash Balance 69 37 134 61
(Figures may not sum up due to rounding)
Source: DHA, VCSC

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 VCSC Rating System
Stock ratings are set based on projected total shareholder return (TSR), defined as (target price – current price)/current
price + dividend yield, and are not related to market performance.

Equity rating key Definition

BUY If the projected TSR is 20% or higher
OUTPERFORM If the projected TSR is between 10% and 20%
MARKET PERFORM If the projected TSR is between –10% and 10%
UNDERPERFORM If the projected TSR is between –10% and –20%
SELL If the projected TSR is –20% or lower
The company is or may be covered by the Research Department but no rating or
target price is assigned either voluntarily or to comply with applicable regulation
NOT RATED
and/or firm policies in certain circumstances, including when VCSC is acting in an
advisory capacity in a merger or strategic transaction involving the company.
A rating may be suspended, or coverage terminated, if fundamental information is
RATING SUSPENDED, deemed insufficient to determine a target price or investment rating or due to a
COVERAGE TERMINATED reallocation of research resources. Any previous investment rating and target price
are no longer in effect.

Unless otherwise specified, these performance parameters are set with a 12–month horizon. Movement in share prices may
cause a temporary mismatch between the latest published rating and projected TSR for a stock based on its market price
and the latest published target price.

Target prices are generally based on the analyst's assessment of the stock’s fair value over a 12–month horizon. However,
the target price may differ from the analyst’s fair value if the analyst believes that the market will not price the stock in line
with assessed fair value over the specified time horizon.

Risks: Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely
affect the value, price or income of any security or related instrument mentioned in this report. For investment advice, trade
execution or other enquiries, clients should contact their local sales representative.

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 Disclaimer
Analyst Certification of Independence
I, Anh Tong, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers.
I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views
expressed in this report. The equity research analysts responsible for the preparation of this report receive compensation based upon various
factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues
from, among other business units, Institutional Equities and Investment Banking.

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February 16, 2023 | 15