AN PHAT BIOPLASTICS (AAA): 3Q results look strong thanks to strong core-earnings growth (HSC)

Investment conclusion – Upgrade to Add

Our target price is VND17,000 per share, implying 8.6% upside from the current trading price. Thanks to the contribution from An Phat Complex, we forecast the company will see strong net profit growth of 162.7% y/y in FY19 and solid growth of 11.9% y/y in FY20. As one third of the area at the industrial park is leased, this will create sustainable cash flow for AAA from FY21 onwards.
In term of its core business, AAA is one of the largest plastic manufacturers in Vietnam. Given the risk of international bans on single-use plastic bags, the company is focusing on biodegradable products to offset decreases in profit from single-use products. Corporate governance risks remain our main concern in respect of the Company. However, with APH’s IPO and the shift to the HSX by NHH, we expect business activities at these companies will become more transparent over time.

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