Company Quarterly Earnings Update – NTP VN – 2018 H1

Summary of the H1 2018 results of Tien Phong Plastic JSC (NTP VN) 

H1/2018 results: highlights
  • NTP’s results reflected strong growth in Q2/2018. In H1/2018, the company’s net sales reached VND 2,079 bn (+1.3% yoy) with 2.0% yoy higher sales volume. Gross margin fell to 30.9%, mainly due to higher input prices in Q2: Net profit was VND 137 bn (-32.3% yoy).
  • By the end of H1/2018, NTP had VND 167 bn of cash and cash equivalents, accounting for 3.8% of total assets. The D/E ratio was 0.94x.
Other developments
  • The An Da real estate project has not started construction yet. NTP is preparing the necessary documents for the project and is seeking for a co-developer.
  • There is no update on the State Capital Investment Corporation’s (SCIC) divestment of its 25.77% stake at NTP.
Outlook
  • We expect NTP to experience a slowdown in sales growth in 2018, coupled with a lower profitability level. The main reasons are lower demand growth from the real estate sector and yoy higher input prices in H1. NTP is likely to resume sales growth in the remaining quarters of 2018 with the same level of profitability as in Q2. We estimate net sales of VND 4,616 bn (+4.2% yoy) and net profit of VND 386 bn (-21.7% yoy) for all 2018.
  • From 2019 onward, net sales growth should continue accelerating. There is rising supply in the affordable housing segment (for example: the VinCity Apartment project from Vingroup is expected to be launched in late 2018, with a total of 40,000 units. In comparison, HCMC’s annual sales in 2017 were just slightly above 35,000 units. Government infrastructure spending is also picking up. NTP’s estimated EPS CAGR during 2018-2022 should be 14.8%.
Recommendation

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