Coteccons (CTD) [MARKET PERFORM +7.

1%] Update Report

Industry Construction 2021 2022F 2023F 2024F 80%

CTD VNI
Report Date November 30, 2022 Rev y/y -37.6% 52.1% 4.4% -1.1% 40%
Current Price VND35,000 EPS y/y -92.7% N.M. N.M. 21.6%
Target Price VND37,500 NPAT-MI y/y -92.8% N.M. N.M. 21.6% 0%
Last Target Price VND60,500 GPM 3.0% 3.0% 3.3% 3.5% -40%
Upside to TP +7.1% NPM 0.3% -0.1% 1.1% 1.4%
Dividend Yield 0.0% P/B 0.3x 0.3x 0.3x 0.3x -80%
TSR +7.1% P/E 106.9x N.M. 15.6x 12.8x Nov-21 Mar-22 Jul-22 Nov-22

Market Cap USD104.2mn CTD Peers VNI Company Overview

Foreign Room USD0.0mn P/E (ttm) N.M. 26.0x 10.8x CTD is a private construction contractor in Vietnam
ADTV30D USD0.7mn P/B (curr) 0.3x 0.7x 1.7x with a wide project portfolio that includes residential,
State Ownership 0.0% Net D/E -0.1x 0.7x N/A hospitality and industrial projects. Kustocem and
Outstanding Shares 73.9 mn ROE N.M. 2.5% 15.5% The8th are major shareholders with respective
Fully Diluted Shares 73.9 mn ROA N.M. 0.5% 2.5% stakes of 17.6% and 10.4%.

Vy Nguyen
c

Expecting net loss in 2022F, modest earnings in 2023F

Manager
vy.nguyen@vcsc.com.vn
+8428 3914 3588 ext.147
 We upgrade CTD to MARKET PERFORM from UNDERPERFORM despite cutting our target price
by 38% to VND37,500/share as CTD’s share price has corrected 51% over the last three months.
 Our lower target price is due to 1) decreasing our 2022-2026F aggregate NPAT-MI by 47% because
of our lower projected EBIT margin and signed contract value over the forecast period, 2) increasing
our WACC assumption to 16.4% from 13.0%, and 3) reducing our target P/E to 7.5x from 8.0x.
These factors are partially offset by rolling our target price horizon forward to end-2023.
 CTD reported a net loss of VND4bn (USD142,600) in Q3 2022 vs net losses of VND12bn
(USD0.5mn) and VND24bn (USD1.0mn) in Q3 2021 and Q2 2022, respectively. This was due to
stagnant domestic construction activities and high provision expenses for legacy projects. In 9M
2022, CTD’s NPAT-MI was VND2bn (USD73,900; -98% YoY).
 For 2022F, we project a net loss of VND14bn (USD0.5mn) vs previously net profit of VND19bn
(USD0.8mn; -24% YoY), which is mostly due to both lower revenue recognition and gross margin.
This translates to a core NPAT-MI forecast (excluding provision expenses for doubtful receivables)
of VND226bn (USD9.1mn, +38% YoY) vs VND259bn (USD10.4mn; +58% YoY) previously.
 For 2023F, we forecast NPAT-MI of VND165bn (USD6.7mn) as we expect 2023F gross margin to
inch up YoY to 3.3% from 2022F’s low base. However, stagnant domestic private construction
activities and fierce competition will limit the scope for a stronger margin expansion.
 We view CTD’s 2023F P/E of 15.6x as demanding vs the domestic peer level of 8.0x (before
Vietnam’s fourth wave of COVID-19 in Q3 2021).
Stagnant domestic construction and competition weighs on 2022F/23F backlog. CTD reported
the expected backlog to be transferred to 2023 at around VND17.0tn (USD685.5mn; -35% YoY), which
we backtrack to derive expected new contract value of VND5.4tn (USD215.8mn) in full-year 2022 —
significantly lower than the previously announced new contact value in H1 2022 of VND16.0tn
(USD645.2mn). The discrepancy is due to CTD’s inconsistent classification of reported new contract
value applied in 2021 and 2022, which results in a possible overstatement of new contract value in
2021 and backlog transferred to 2022. As a result, we decrease our 2022F signed contract value to
VND5.4tn (USD215.8mn) from VND20tn (USD806.4mn) previously as we also expect sluggish
construction and fierce competition to significantly impact revenue recognition and the feasibility of
new contracts. For 2023F, we assume signed contract value of VND8.0tn (USD322.6mn). We also
reduce our forecasts for annual signed contract value in 2024F-2027F to VND12tn (USD483.9mn)
from previously VND22tn (USD887.1mn).
We forecast reported EBIT to incur a loss in 2022F with a modest recovery in 2023F. CTD’s Q3
2022 gross margin fell to 1.1% vs 6.6% in Q2 2022 — even lower than 1.6% in Q3 2021 during
Vietnam’s fourth wave of COVID-19. As such, we decrease 2022F assumed gross margin to 3.0% vs
4.7% previously. For 2023F, we forecast gross margin to inch up YoY to 3.3%. We also assume CTD
will book VND300bn (USD12.1mn) of net provision in 2022 and no provision in 2023.

See important disclosure at the end of this document www.vcsc.com.vn | VCSC<GO> November 30, 2022 | 1
 9M 2022 Recap: Large provision expenses, gross margin
squeeze weigh on earnings
Figure 1: 9M 2022 results

9M 9M % YoY 2022F 9M as %
VND bn VCSC comments
2021 2022 Growth old of 2022F old
* Modest YoY revenue growth due to slow recovery of
Revenue 6,189 8,307 34% 16,382 51% domestic construction activities and sluggish construction
progress for signed projects.
* Stagnant domestic construction activities created
Gross profit 272 315 16% 770 41% pressure on both CTD’s revenue and gross margin in Q3
2022.
* CTD booked VND42bn (USD1.7mn) of net provision
expenses in Q3 2022 under SG&A expenses, which
declined from an abnormally high amount of VND239bn
(USD9.7mn) in Q2 2022.
* Out of the VND239bn of provisions booked in Q2 2022,
SG&A expenses -333 -553 66% -955 58% VND242bn (USD10.4mn) was attributed to the D’Capitale
project (Tan Hoang Minh Group is the project owner).
* For 9M 2022, CTD booked VND281bn (USD11.4mn) of
total net provision expenses, translating to a provision
balance for doubtful receivables of VND907bn
(USD37.0mn) at end-Q3 2022 (details in Figures 7 & 8).
* CTD incurred a loss at the EBIT level in 9M 2022 due to
EBIT -61 -237 289% -185 128%
high provision expenses and squeezing margins.
* CTD had cash equivalents and short-term cash deposits
Net financial of VND2.6tn (USD106.3mn) at end-Q3 2022 vs VND3.3tn
189 208 10% 201 104%
income (USD132.5mn) at end-2021 and VND3.2tn (USD131.mn)
at end-2020.
Net other income 11 54 406% 23 236%
Shares of (loss)
-22 -16 -26% -15 110%
profit of associates
Profit before tax 117 8 -93% 23 35%
NPAT 88 2 -98% 19 10%
* CTD’s Q3 2022 gross margin fell to 1.1% vs 6.6% in Q2
Gross margin % 4.4% 3.8% 4.7% 2022 — even lower than 1.6% in Q3 2021 during Vietnam’s
fourth wave of COVID-19.
SG&A as % sales 5.4% 6.7% 5.8%
* CTD incurred a loss at the EBIT level in 9M 2022 due to
EBIT margin % -1.0% -2.9% -1.1%
high provision expenses.
NPAT margin % 1.4% 0.0% 0.1%
Core performance
(excluding provision for doubtful receivables booked under SG&A expenses)
Net provision -255 -281 10% -300 94%
SG&A expenses -348 -271 -22% -655 41%
EBIT 123 44 -64% 115 38%
PBT 356 289 -19% 323 90%
NPAT-MI 285 232 -19% 259 90%
SG&A as % sales 5.6% 3.3% 4.0%
EBIT margin % 2.0% 0.5% 0.7%
NPAT margin % 4.6% 2.8% 1.6%

Source: Company’s financial statements, VCSC

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 2022 Outlook: Provision to cause EBIT loss despite core
business improvement
Figure 2: 2022 forecast
2022F 2022F
2022F 2022F
VND bn 2020 2021 Revised Revised VCSC assumptions/forecasts
Old Revised
vs Old vs 2021
* We decrease 2022F signed contract value to
VND5.4tn (USD215.8mn) vs VND20tn (USD806.4mn)
previously as we expect sluggish construction will
Revenue 14,558 9,087 16,382 13,820 -16% 52% significantly impact the revenue recognition and
feasibility of signed contracts.
* CTD reported its expected backlog to be transferred
to 2023 is VND17tn (USD685.5mn; -35% YoY).
Gross profit 856 269 770 415 -46% 54% * Revised down due to weak Q3 2022 result.
* Revised down due to lower-than-expected Q3 2022
core SG&A expenses.
SG&A expenses -656 -516 -955 -715 -25% 38%
* We maintain our assumption that CTD will book
VND300bn (USD12.1mn) of total provision in 2022.
* We continue to expect CTD to incur a loss at the EBIT
EBIT 201 -248 -185 -300 N.M. N.M. level in 2022F due to low revenue recognition, margin
compression and high provision expenses.
Net financial
228 264 201 243 21% -8%
income
Net other income 27 52 23 60 162% 15%
Shares of (loss)
profit of -27 -30 -15 -20 33% -34%
associates
Profit before tax 428 38 23 -17 N.M. N.M.

NPAT-MI 334 24 19 -14 N.M. N.M.

* We decrease our forecast due to lower-than-expected

9M 2022 results. We expect stagnant domestic
Gross margin % 5.9% 3.0% 4.7% 3.0% construction activities — especially from the private
sector — will continue to weigh on contractor margins
in Q4 2022 and early 2023.
SG&A as % sales 4.5% 5.7% 5.8% 5.2%
EBIT margin % 1.4% -2.7% -1.1% -2.2%
NPAT margin % 2.3% 0.3% 0.1% -0.1%
Core performance
(excluding provision for doubtful receivables booked under SG&A expenses)
Net provision -271 -167 -300 -300 0% 80%
SG&A expenses -385 -349 -655 -415 -37% 19%
EBIT 471 -81 115 0 -100% N.M.
PBT 698 205 323 283 -12% 38%
NPAT-MI 559 164 259 226 -12% 38%
EPS (VND/share) 7,594 2,220 3,500 3,065
SG&A as % sales 2.6% 3.8% 4.0% 3.0%
EBIT margin % 3.2% -0.9% 0.7% 0.0%
NPAT margin % 3.8% 1.8% 1.6% 1.6%

Source: Company’s financial statements, VCSC

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 2023 Outlook: Positive EBIT due to gross margin
improvement, lower SG&A expenses
Figure 3: 2023 forecast
2023F vs
2022F
VND bn 2020 2021 2023F 2022F VCSC assumptions/forecasts
Revised
Revised
* We assume 2023F signed contract value of VND8tn
(USD322.6mn) vs VND5.4tn (USD215.8mn) in 2022F.
Revenue 14,558 9,087 13,820 14,425 4%
* CTD reported that its expected backlog to be transferred to
2023 is VND17tn (USD685.5mn; -35% YoY).
Gross profit 856 269 415 476 15%

SG&A expenses -656 -516 -715 -418 -41%

* We expect CTD to record modest profit at the EBIT level in
EBIT 201 -248 -300 58 N.M. 2023F after losses in 2021-2022 due to higher expected gross
margin and no provision expenses in SG&A.
Net financial
228 264 243 114 -53%
income
Net other income 27 52 60 35 -42%
Shares of (loss)
profit of -27 -30 -20 0 N.M.
associates
Profit before tax 428 38 -17 207 N.M.

NPAT-MI 334 24 -14 165 N.M.

* We expect 2023F gross margin to inch up YoY mostly thanks

to construction material prices cooling from their high base in
Gross margin % 5.9% 3.0% 3.0% 3.3% 2022. However, stagnant domestic private construction activities
and fierce competition will limit CTD’s room for a strong margin
expansion.
SG&A as % sales 4.5% 5.7% 5.2% 2.9% * Lower YoY due to no provision expenses.
EBIT margin % 1.4% -2.7% -2.2% 0.4%
NPAT margin % 2.3% 0.3% -0.1% 1.1%
Core performance
(excluding provision for doubtful receivables booked under SG&A expenses)
Net provision -271 -167 -300 0 N.M.
SG&A expenses -385 -349 -415 -418 1%
* Positive core EBIT due to gross margin improvement and
EBIT 471 -81 0 58 N.M.
lower core SG&A expenses.
PBT 698 205 283 207 -27%
NPAT-MI 559 164 226 165 -27%
EPS (VND/share) 7,594 2,220 3,065 2,241
SG&A as % sales 2.6% 3.8% 3.0% 2.9%
EBIT margin % 3.2% -0.9% 0.0% 0.4%
NPAT margin % 3.8% 1.8% 1.6% 1.1%

Source: Company’s financial statements, VCSC

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 Figure 4: Assumptions for CTD’s annual new contract value and revenue recognition

(VND bn) 2019 2020 2021 2022F 2023F 2024F 2025F 2026F 2027F
New forecast
New contract
16,333 7,000 25,000* 5,352* 8,000 12,000 12,000 12,000 12,000
value
% YoY Growth -47% -57% 257% -79% 49% 50% 0% 0% 0%
Revenue 23,733 14,558 9,087 16,333 7,000 25,000 16,333 7,000 25,000
% YoY Growth -17% -39% -38% 52% 4% -1% -21% 7% 0%
Old forecast
New contract
16,333 7,000 25,000 20,000 22,000 22,000 22,000 22,000
value
% YoY Growth -47% -57% 257% -20% 10% 0% 0% 0%
Revenue 23,733 14,558 9,087 16,382 22,386 29,186 22,000 22,000
% YoY Growth -17% -39% -38% 80% 37% 30% -25% 0%

Source: CTD, VCSC forecasts. Note (*): CTD reported expected backlog transferred to 2023 to be around
VND17.0tn (USD685.5mn; -35% YoY), which we backtrack to derive expected new contract value of VND5.4tn
(USD215.8mn) in full-year 2022 — significantly lower than the amount announced in H1 2022 of VND16.0tn
(645.2mn). The discrepancy is due to CTD’s inconsistent classification of reported new contract value applied in
2021 and 2022, which results in a possible overstatement of new contract value in 2021 and backlog transferred
to 2022.

Figure 5: CTD’s signed contract value (VND tn) Figure 6: CTD’s backlog (VND tn)

27 29
25 26
31 24
22 23
28 21 27
22 14 15 25 14 18 17
15
8 16 9
6 10
6 10 7 5 6 5 7

Signed contract value Revenue

Source: Company data, VCSC (2022 data is VCSC’s forecast)

Figure 7: CTD’s quarterly provision balance for doubtful Figure 8: CTD’s quarterly provision amount booked for
receivables doubtful receivables
1,000 12% 50
10% 0
800
8% -50
600 -100
6%
400 -150
4% -200
200 2% -250
0 0% -300

Reversed provision booked in the quarter (VND bn)

Provision balance (VND bn - LHS) Provision booked in the quarter (VND bn)
Provision balance as % of receivables (% - RHS) Net provision booked in the quarter (VND bn)

Source: Company’s data, VCSC

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 Figure 9: Quarterly revenue and gross margin of CTD and Ricons

10.0%
18,000 9.0%

16,000 8.0%
7.0%
14,000
6.0%
12,000
5.0%
10,000
4.0%
8,000
3.0%
6,000
2.0%
4,000 1.0%
2,000 0.0%
0 -1.0%

CTD's revenue (VND bn - LHS) Ricons' revenue (VND bn - LHS) CTD's GPM (% - RHS)

Ricons' GPM (% - RHS) Linear ( CTD's GPM (% - RHS) ) Linear ( Ricons' GPM (% - RHS) )

Source: Company data, VCSC. Note: CTD made a loss at Q4 2021 gross profit level.

Figure 10: Quarterly revenue and gross margin of CTD and Hoa Binh Construction (HSX: HBC)

12.0%

18,000
10.0%
16,000

14,000 8.0%

12,000
6.0%
10,000
4.0%
8,000

6,000 2.0%
4,000
0.0%
2,000

0 -2.0%

CTD's revenue (VND bn - LHS) HBC's revenue (VND bn - LHS) CTD's GPM (% - RHS)
HBC's GPM (% - RHS) Linear ( CTD's GPM (% - RHS) ) Linear ( HBC's GPM (% - RHS) )
Linear ( HBC's GPM (% - RHS) )

Source: Company data, VCSC. Note: CTD made a loss at Q4 2021 gross profit level.

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 Valuation
We continue to use a combination of the DCF (50% weighting) and P/E (50% weighting)
methodologies to derive a target price of VND37,500/share for CTD, which is 38% lower compared to
our previous target price of VND60,500/share.
 Our DCF-derived valuation is 32% lower compared to our last Update Report mainly because we
cut our 2022-2026F aggregate NPAT- MI by 47% as a result of 1) lowering our projected EBIT
margin and signed contract value over the forecast period, and 2) raising our WACC assumption
to 16.4% from 13.0% as we increase our ERP assumption by 1 ppt, increase our cost of debt
assumption by 1 ppt and increase our beta assumption to 1.33 from 1.10 based on CTD’s two-
year adjusted beta. These factors are partially offset by rolling our target price horizon forward to
end-2023
 Our P/E-derived fair price is 52% lower than our last Update Report as we use a lower 2023F EPS
of VND2,241 compared to average 2022-2023F EPS of VND4,377 as previously. We also reduce
our target P/E of to 7.5x from 8.0x previously to reflect our higher WACC assumption.
Figure 11: Valuation summary

Valuation method Fair price Weight (VND/share)

DCF 58,200 50% 29,100
Targeted P/E at 7.5x 16,800 50% 8,400
Target price (TP) 37,500
2022F P/E at TP (based on core EPS) 12.2x
2023F P/E at TP 16.7x
Source: VCSC

Discounted cash flow (DCF)

Our valuation mostly reflects our expectations for CTD’s core construction business. In this Update
Report, we maintain our assumption for CTD’s total capex in 2023-2027F at VND1.0tn (USD43.5mn)
— in accordance with CTD’s guidance — and continue to apply a terminal growth rate of 1.0%.
Figure 12: Discounted cash flow
Key assumptions (VND tn) 2019 2020 2021 2022F 2023F 2024F 2025F 2026F
Newly signed contract value 16.3 7.0 25.0 5.4 8.0 12.0 12.0 12.0
Net revenue 23.7 14.6 9.1 13.8 14.4 14.3 11.2 12.0
Gross profit margin % 4.4% 5.9% 3.0% 3.0% 3.3% 3.5% 3.8% 4.0%
EBIT margin % 2.5% 1.4% -2.7% -2.2% 0.4% 0.6% 0.9% 1.1%
Net profit margin % 3.0% 2.3% 0.3% -0.1% 1.1% 1.4% 2.4% 2.7%
FCF forecasts (VND bn) 2023F 2024F 2025F 2026F 2027F
Net income 293 329 396 416 408
+ Depreciation 115 124 90 67 76
- Working cap increase 1,100 251 1,007 -264 0
- Capex -200 -200 -200 -200 -200
Free Cash Flow 1,309 504 1,293 20 284
Present value of FCF 1,122 370 791 11 132
Total PV of FCF 1,122 1,492 2,283 2,294 2,425
Cost of Capital Previous Revised DCF valuation VND bn
Beta 1.00 1.33 PV of 5Y FCF 2,425
Market Risk Premium % 7.0% 8.0% PV of Terminal Val 850
Risk Free Rate % 6.0% 6.0% PV of FCF and TV 3,275
Cost of Equity % 13.0% 16.6% Plus: Cash+STinv. 2,486
Cost of Debt % 10.0% 11.0% Less: Debt -1,465
Corporate Tax Rate % 20.0% 20.0% Value of Equity 4,296
Debt-to-capital ratio % 7.1% 15.2% Current O/S (mn) 74
WACC % 13.0% 16.6% DCF value (VND/share) 58,200
Terminal Growth Rate % 1.0% 1.0%
Source: VCSC

See important disclosure at the end of this document www.vcsc.com.vn | VCSC<GO> November 30, 2022 | 7
 Figure 13: Sensitivity analysis of our target price (VND/share) for CTD in relation to DCF’s WACC
and terminal growth rate, ceteris paribus

WACC %

Terminal growth rate %

11.5% 12.0% 12.5% 16.6% 13.5% 14.0% 14.5%
0.0% 43,100 42,300 41,600 37,100 40,300 39,700 39,100
0.5% 43,600 42,700 42,000 37,300 40,600 40,000 39,400
1.0% 44,100 43,200 42,400 37,500 41,000 40,300 39,700
1.5% 44,700 43,700 42,900 37,700 41,300 40,700 40,000
2.0% 45,300 44,300 43,400 38,000 41,800 41,000 40,400
2.5% 46,100 45,000 44,000 38,200 42,200 41,400 40,700
3.0% 46,900 45,700 44,600 38,500 42,700 41,900 41,100

Source: VCSC

Peer P/E multiple

CTD has not had a meaningful TTM P/E since October 2021 due to modest TTM earnings. Therefore,
we chose a target P/E of 8.0x, which is the average of the peer median TTM P/E in January 2019 -
April 2021. We chose this to represent the level of CTD’s peer median TTM P/E before the fourth wave
of COVID-19 that occurred in Vietnam. We note that Vietnam’s fourth wave of COVID-19, which
caused significant disruptions to domestic construction activities, lasted from May to early October
2021. In this Update Report, we reduce our target P/E to 7.5x from previously 8.0x to reflect our higher
WACC assumption.

Figure 14: Local peers

Net
TTM Gross Net TTM LQ
Market Y-o-Y TTM Y-o-Y debt/ ROE ROA
Ticker Net margin margin P/E P/B
cap (%) NPAT (%) Equity (%) (%)
Sales (%) (%) (x) (x)
(%)
USD mn USD mn USD mn
HBC 103 639 37.4 4 -7.9 7.1 0.9 105.8 2.5 0.5 26.0 0.7
FCN 55 151 4.0 3 -88.9 13.5 2.0 72.1 0.5 0.2 105.7 0.5
SC5 10 83 -9.7 1 -22.8 4.8 2.0 13.8 7.1 1.0 10.7 0.8
Average 56 291 10.6 3 -39.9 8.5 1.6 63.9 3.4 0.6 47.4 0.6
Median 55 151 4.0 3 -22.8 7.1 2.0 72.1 2.5 0.5 26.0 0.7
CTD 104 452 7.3 -2.5 N.M. 2.8 -0.5 -14.3 -0.4 -0.7 N.M. 0.3

Source: Bloomberg, VCSC. Note: Data as of November 30, 2022.

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 Figure 15: Historical TTM P/E

70

60

50

40

30 28.6x
x
20

10
8.0x
0
Jul-19

Jul-20

Jul-21

Jul-22
Jan-19

Jan-20

Jan-21

Jan-22
Mar-19

Mar-20

Mar-21

Mar-22
Sep-19
Nov-19

Sep-20
Nov-20

Sep-21
Nov-21

Sep-22
Nov-22
May-19

May-20

May-21

May-22
CTD
Peer median
2-year average of peer median
Pre-COVID fourth wave average of peer median

Source: Bloomberg, VCSC. Note: CTD’s data from October 2021 to November 2022 is not meaningful due to
modest NPAT-MI. Note: We use the average of peer median TTM P/E from January 2019 - April 2021 as the
level of the peer median TTM P/E before Vietnam’s fourth wave of COVID-19.

Recommendation History
Figure 16: Historical VCSC target price vs share price (VND/share)

VND/share
O-PF
180,000 160,000 M-PF
160,000
O-PF
160,000 148,000

140,000 M-PF
124,200
120,000
U-PF
93,000
100,000
M-PF
70,000 U-PF
M-PF 75,700
80,000 68,000 U-PF
M-PF 60,500
60,000 62,500 M-PF
M-PF
Actual price 65,000 M-PF M-PF 56,300 MARKET
M-PF M-PF M-PF PERFORM
40,000 54,300 52,100 57,200 56,300
Target price 50,800 37,500

20,000
Jun-18

Jun-19

Jun-20

Jun-21

Jun-22
Feb-19

Feb-20

Feb-21

Feb-22
Aug-18

Dec-18

Aug-19

Dec-19

Aug-20

Dec-20

Aug-21

Dec-21

Aug-22

Dec-22
Oct-18

Oct-19

Oct-20

Apr-21

Oct-21

Oct-22
Apr-19

Apr-20

Apr-22

Source: Bloomberg, VCSC

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 Financial Statements
P&L (VND bn) 2021 2022F 2023F 2024F B/S (VND bn) 2021 2022F 2023F 2024F
Revenue 9,087 13,820 14,425 14,261 Cash & equivalents 885 286 527 829
COGS -8,819 -13,406 -13,949 -13,762 ST investment 2,401 2,200 2,200 2,200
Gross Profit 269 415 476 499 Accounts receivables 8,327 9,087 8,694 8,401
Sales & Marketing exp 0 0 0 0 Inventories 1,558 3,306 2,675 2,639
General & Admin exp -516 -715 -418 -414 Other current assets 349 415 433 428
Operating Profit -248 -300 58 86 Total Current assets 13,519 15,294 14,529 14,496
Financial income 277 403 274 291 Fixed assets, gross 1,381 1,581 1,781 1,981
Financial expenses -13 -160 -160 -160 - Depreciation 624 732 848 971
- o/w interest expense -1 -160 -160 -160 Fixed assets, net 757 849 933 1,010
Associates -30 -20 0 0 LT investment 335 320 320 320
Net other income/(loss) 52 60 35 35 LT assets other 82 124 130 128
Profit before Tax 38 -17 207 252 Total LT assets 1,174 1,293 1,383 1,458
Income Tax -14 3 -41 -50 Total Assets 14,693 16,587 15,912 15,954
NPAT before MI 24 -14 165 201
Minority Interest 0 0 0 0 Accounts payable 3,019 3,122 3,057 3,016
NPAT less MI, reported 24 -14 165 201 Short-term debt 2 940 0 0
NPAT less MI, adjusted 24 -14 165 201 Other ST liabilities 3,422 3,763 3,928 3,883
Total current liabilities 6,443 7,825 6,985 6,900
EBITDA -143 -192 173 209 Long term debt 0 525 525 525
EPS reported, VND 328 -185 2,241 2,725 Other LT liabilities 3 3 3 3
EPS adjusted, VND 328 -185 2,241 2,725 Total Liabilities 6,445 8,353 7,513 7,427
EPS fully diluted, VND 328 -185 2,241 2,725
DPS, VND 0 0 0 1,000 Preferred Equity 0 0 0 0
DPS/EPS (%) 0% 0% 0% 37% Paid in capital 793 793 793 793
Share premium 3,039 3,039 3,039 3,039
RATIOS 2021 2022F 2023F 2024F Retained earnings 316 302 467 595
Growth Other equity 4,046 4,046 4,046 4,046
Revenue growth -37.6% 52.1% 4.4% -1.1% Minority interest 55 55 55 55
Op profit (EBIT) growth N.M. N.M. N.M. 48.3% Total equity 8,248 8,234 8,400 8,527
PBT growth -91.1% N.M. N.M. 21.6% Liabilities & equity 14,693 16,587 15,912 15,954
EPS growth, adjusted -92.7% N.M. N.M. 21.6%
Y/E shares out, mn 74 74 74 74
Profitability
Gross Profit Margin 3.0% 3.0% 3.3% 3.5% CASH FLOW (VND bn) 2021 2022F 2023F 2024F
Op Profit, (EBIT) Margin -2.7% -2.2% 0.4% 0.6% Beginning Cash Balance 1,397 885 286 527
EBITDA Margin -1.6% -1.4% 1.2% 1.5% Net Income 24 -14 165 201
NPAT-MI Margin, adj, 0.3% -0.1% 1.1% 1.4% Dep, & amortization 105 108 115 124
ROE 0.3% -0.2% 2.0% 2.4% Chge in Working Cap -40 -2,155 1,104 250
ROA 0.2% -0.1% 1.0% 1.3% Other adjustments 280 -16 -4 1
Cash from Operations 369 -2,077 1,381 576
Efficiency
Days Inventory On Hand 63.1 66.2 78.2 70.5 Capital Expenditures, net -47 -200 -200 -200
Days Accts, Receivable 320.8 230.0 225.0 218.8 Investments, net -582 216 0 0
Days Accts, Payable 130.9 83.6 80.8 80.5 Cash from Investments -629 16 -200 -200
Cash Conversion Days 253.0 212.6 222.4 208.7
Dividends Paid -74 0 0 -74
Liquidity ∆ in Share Capital -178 0 0 0
Current Ratio x 2.1 2.0 2.1 2.1 ∆ in ST debt 0 938 -940 0
Quick Ratio x 1.9 1.5 1.7 1.7 ∆ in LT debt 0 525 0 0
Cash Ratio x 0.5 0.3 0.4 0.4 Other financing C/F 0 0 0 0
Debt / Assets 0.0% 8.8% 3.3% 3.3% Cash from Financing -252 525 0 -74
Debt / Capital 0.2% 184.8% 66.2% 66.2%
Net Debt / Equity -39.8% -12.4% -26.2% -29.4% Net Change in Cash -512 -1,537 1,181 302
Interest Coverage x N.M. -1.9 0.4 0.5 Ending Cash Balance 885 286 527 829

Source: Company’s financial statements, VCSC forecasts

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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

NOT RATED 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 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.

RATING SUSPENDED, A rating may be suspended, or coverage terminated, if fundamental information is deemed
COVERAGE TERMINATED insufficient to determine a target price or investment rating or due to a 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, Vy Nguyen, 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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