- We attended ACV’s virtual AGM on July 27, 2021.
- Shareholders approved ACV’s 2021 guidance for total income (including revenue, financial income and other income) of VND10.6tn (USD455mn; +4% YoY) and PBT of VND2.4tn (USD102mn; +18% YoY). Moreover, ACV guides for a 19% YoY increase in total passengers to around 75-79 million passengers in 2021G.
- ACV’s 2021 guidance is based on the expectation that the current COVID-19 wave in Vietnam will be contained by August 2021 and that international passenger flights will gradually recover from the end of Q3 2021.  
- While ACV does not clearly state whether the guidance includes contributions from State-invested aviation infrastructure assets (including runways), we believe the guidance includes contributions from these assets.
- ACV’s 2021G total income and PBT guidance is 20% and 42% below our forecasts, respectively. Additionally, Vietnam’s ongoing COVID-19 wave is beyond our current expectation and is severely affecting the country’s domestic aviation market. We therefore see potential downside risk to our 2021 earnings forecast, pending a more extensive review.
- Shareholders also approved a bonus & welfare fund allocation of VND390bn (USD17mn) — 24% of FY2020 NPAT-MI — which is above our expectation of 10%. The rates for FY2018 and FY2019 were 10.8% and 9.95%, respectively.
- Shareholders approved appointments of Board of Directors (BOD) and Board of Supervisors (BOS) for the 2021-2026 term with seven BOD members (three new members vs the previous term) and three BOS members (one new member replacing a previous member).

ACV incurred losses from core businesses in H1 2021. Management shared ACV’s preliminary Q2 2021 results with total income of VND1.2tn (USD53mn) — not including revenue contributions from State-invested infrastructure assets/runways of VND333bn (USD14mn) — and PBT of VND405bn (USD17mn). In H1 2021, ACV’s preliminary total income was VND4.5tn (USD194mn) — including VND1.7tn (USD75mn) of financial income derived from term deposit investments — while its PBT was VND1.2tn (USD52mn; -38%), implying a loss from core businesses of around VND400bn (USD17mn) in the period, according to the company.

Management shared that the Government agreed for ACV to retain earnings for future investments.  In a meeting on dividend and profit allocation for ACV over 2019-2025, the Vice Prime Minister agreed to ACV’s plan of retaining its earnings and increasing its charter capital (through stock dividends) for future investments. The Vice Prime Minister assigned the Committee for Management of State Capital (CMSC) to finalize the proposals to submit to the Ministry of Finance (MoF) in July 2021. The MoF is now cooperating with related ministries to prepare the proposals to submit to the Prime Minister for approval.

Management update on financing plan for the Long Thanh International Airport (LTA) Phase 1. Management shared that several institutions have approached ACV to finance the LTA project. Vietcombank (HOSE: VCB) committed to lend ACV USD2.5bn, in which LTA financing is around USD1.5bn-2bn (including VND and USD-dominated loans) with a term of up to 240 months (or 20 years). Management expects to draw down this loan mainly from 2023-2024F as ACV had a cash balance of VND33tn (USD1.4bn) as of the end Q1 2021.

Moving ACV’s listing to HOSE requires resolving all pending issues. There are two auditor emphasized matters in ACV’s audited reports, including (1) the accounting treatment for State-invested aviation infrastructure assets and (2) pending finalization of equitization. Per management, ACV will move to HOSE when all pending issues are resolved. Management shared that ACV is still working to resolve the two auditors emphasized matters despite the legal scheme for runways already being approved.