Transport and Industry Development Investment Joint Stock Company (Tracodi)

BCG: a potential share


(ĐTCK) After a long period of sublimation, VN-Index has broken the historical milestone of 1,170 points, but according to experts, many stocks are being underpriced. BCG (Bamboo Capital JSC) is among those, the market price is below par value, while the circumspect valuation of KB Securities Company recently was 17,000 VND/share.

 3 spearheads of BCG

BCG is known as a holding company, investing in multiple subsidiaries and associates of diffferent industries. Year 2017 marked a significant change of the company's performance after a period of restructuring subsidiaries and investments, creating a stable development foundation for the company in the year 2018.

Tracodi JSC (stock quote: TCD, listed from 2017), a subsidiary of BCG, has grown rapidly in revenue and profit, thanks to Antraco's quarries high productivities and abundant construction projects.

Nguyen Hoang, another subsidiary of BCG, has opened many fastidious export markets, expanded wood processing sector. Recently, the company has completed and put 4-star resort Casa Marina (Binh Dinh) into operation. This project is expected to bring stable cash flow for BCG in the coming time.

Meanwhile, Thanh Vu Tay Ninh, a firm specialized in cassava starch processing, after successfully debt restructuring with Vietcombank and investing in the new production lines, is expected to have a good growth in 2018.

Talk to “Dau Tu Chung Khoan Newspaper”, Mr. Pham Minh Tuan, deputy general director of BCG, said that this year, the company focused on investing in three key areas, namely real estate, infrastructure and renewable energy. These three spearheads will create a breakthrough for the company.

In infrastructure sector, the company will continue to deploy BOT, BT road projects and build social housing mainly in Long An province.

With real estate, the company will focus on building resorts, high-end residential and commercial complex, offices and apartments in big cities such as Da Nang, Hoi An and Ho Chi Minh.

Renewable energy is the foundation for BCG in 2019. BCG has been approved by the Ministry of Industry and Trade for the plan of two solar farms (40 MW and 100 MW) in the province of Long An. In particular, the 100 MW project will co-develop with Hanwha (Korea). BCG is preparing necessary legal procedures to deploy the construction of small and medium sized solar power plants in Long An, Quang Nam and Dak Lak provinces in Q2/2018.

Mr. Tuan also said that from the end of 2017, the company stopped investing in trade and agriculture activities with average economic efficiency such as Large Field projects, as well as trading cocoa. BCG will also divest its capital from Phu Thuan in early 2018, while focusing on the development of 4 real estate projects, which will bring significant profit in the second half of 2018, and 2019. Currently, BOT 830 connects a series of industrial parks in Long An province with highways linking to the harbor. Vehicles on this road mainly come into the industrial areas, with high traffic. The project run the test in February and started charging at the end of March and officially inaugurated in 4/2018. This is a new source of revenue and profit for BCG this year.

Is BCG stock attractive?

In the recent analysis report on BGC stock, KB Securities Vietnam (KBSV) used the Free Cash Flow of the Firm (FCFF) valuation method to evaluate the value of BCG. According to KBSV, the fair value of BCG shares is 17,100 VND/share, 170% higher than the market price (BCG’s closed price on 26/3 was 6,100 VND/share). Consequently, KBVS recommends buying BCG shares for medium and long term.

Also according to the analysis of KBSV, the foundation of BCG and its subsidiaries is owning a large amount of valuable assets, namely minerals and renewable energy. This will create great growth potential for BCG in the future. With extensive experience in investment banking, BCG's leader team has seen the potential growth of its subsidiaries, thereby offering suitable restructuring solutions.

However, KBSV also made some note about BCG stock. That is, the company's real estate projects have just been deployed, so it takes more time for BCG to start recording revenue and profit. However, the company is on the right track in both investment methods and targets.