At the third quarter of 2019, the consolidated revenue of An Phat Plastic (AAA – HOSE) increased by 8% over the same period, profit before tax increased by 49%. Key production activities grew strongly by 47% in profit and 10.2% in volume.
The accumulated profit before tax for the 3 quarters doubled the whole year of 2018 and completed 85% of the year plan. The rate of industrial park exploitation is at high level.
Assessment of AAA’s short-term growth prospects, including: an increase in packaging output, expanding export markets to Japan and the US;
Plastic bead trade is expected to improve profit margin;
In addition, AAA promotes bio compostable products with high profit margins and reduced price in raw materials.
In addition, the occupancy rate of the industrial zone reaches over 80%.
In the long-term perspective, AAA is one of the few businesses capable of producing bio compostable products and keeping up with the trend of moving from ordinary bags to bio compostable products.
Besides, the PBAT Project of APH will help AAA cut approximately 30% of raw material costs meanwhile reducing R&D costs due to the technology support from APH.
Compared to other enterprises and business results in 2019, AAA is being traded at the price lower than the fair value. Therefore, we recommend buying at the target price of VND 31,000 / share, which is equivalent to a growth prospect of 102% compared to the current price.
Dilution risk: We assume that the holders will convert into 40 million AAA shares in 2020. In this case, the company’s EPS will be subject to a 19% dilution risk.
However, the dilution of the EPS due to dilution will be offset by the expected profit growth of over 20% next year. Therefore, EPS 2020 is forecast not to fluctuate negatively. In addition, An Phat Holdings’ registration to buy all AAA warrants will reduce concern about the selling price.
The accumulated profit before tax for the 3 quarters doubled the whole year of 2018 and completed 85% of the year plan. The rate of industrial park exploitation is at high level.
Assessment of AAA’s short-term growth prospects, including: an increase in packaging output, expanding export markets to Japan and the US;
Plastic bead trade is expected to improve profit margin;
In addition, AAA promotes bio compostable products with high profit margins and reduced price in raw materials.
In addition, the occupancy rate of the industrial zone reaches over 80%.
In the long-term perspective, AAA is one of the few businesses capable of producing bio compostable products and keeping up with the trend of moving from ordinary bags to bio compostable products.
Besides, the PBAT Project of APH will help AAA cut approximately 30% of raw material costs meanwhile reducing R&D costs due to the technology support from APH.
Compared to other enterprises and business results in 2019, AAA is being traded at the price lower than the fair value. Therefore, we recommend buying at the target price of VND 31,000 / share, which is equivalent to a growth prospect of 102% compared to the current price.
Dilution risk: We assume that the holders will convert into 40 million AAA shares in 2020. In this case, the company’s EPS will be subject to a 19% dilution risk.
However, the dilution of the EPS due to dilution will be offset by the expected profit growth of over 20% next year. Therefore, EPS 2020 is forecast not to fluctuate negatively. In addition, An Phat Holdings’ registration to buy all AAA warrants will reduce concern about the selling price.
