• We attended CTR’s AGM in Hanoi on April 24, 2024.
• Our takeaways from the meeting reinforce our optimistic view of CTR’s strong growth outlook, which will be primarily led by its towerco and construction segments. However, we see potential downside risks to our forecasts for CTR mainly due to lower tenancy rates following potential slower progress of sharing towers for the 5G deployment. Meanwhile, the broadband along the North-South Highway project gives upside potential to our forecasts.
• The AGM approved 2024 guidance including total revenue of VND12.7tn (+11% YoY) and NPAT of VND532bn (+3% YoY), which are equivalent to 96% and 84% of our respective forecasts. The guidance is prudent per management and CTR has exceeded its NPAT guidance by 22% on average over the past five years.
• The AGM approved FY2023 cash dividends of VND2,720/share (2.2% yield).

1. Five-year plan:

- CTR guides for double-digit revenue growth for the next five years driven by growth in all segments. Management targets for robust expansion in the towerco segment driven by the mass rollout of the 5G network in Vietnam. In addition, management stated that the construction sector in Vietnam is expected to grow by 7% and CTR is confident that it can outperform the overall sector. CTR targets 5% growth p.a. for the operation segment in the next five years. Details on the five-year plan have not yet been released.

2. Towerco segment:

* Tower leasing:

- CTR plans to build 4,000-5,000 new towers in 2024 (equivalent to around 70% of Viettel’s new towers) vs our forecast of 4,500 new towers.

- Management targets to raise its tenancy ratio to 1.05 in 2025 (1.1 in the best case) from the current ratio of 1.03. CTR believes it is necessary for telcos to increasingly adopt tower sharing going forward for cost efficiency.

- After Viettel and Vinaphone were granted licenses for providing 5G services in Vietnam, CTR believes that these telcos will roll out 5G in 2024 and accelerate the progress in the next five years. CTR believes that telcos have strong incentives to accelerate the progress of mass 5G deployment in Vietnam to generate revenue to partly offset depreciation expenses (due to high initial capex).

* Fiber leasing:

- CTR targets to conduct construction of broadband along the North-South highway – phase 1 (389km) in 2024. CTR will build the broadband portion from Da Nang to the south with a total length of 2,089km in 2024-27. This represents upside potential to our forecasts. 

3. Construction segment:

* Residential construction:

- CTR believes that government policies may alleviate challenges in the real estate market, thereby supporting the growth of the residential construction segment.

- To leverage high State spending in 2024, CTR targets to diversify its projects in the B2B construction subsegment including seaports, transportation, power transmission lines, industrial infrastructure, etc. CTR’s participation in a small portion of the circuit-3 500kV transmission line paves the way for CTR to receive more workload related to power transmission line construction going forward.

- CTR plans to expand its coverage of the B2C construction subsegment and continues to boost synergy with other services and products such as smart homes, furniture, appliances, telecom, and maintenance services.

4. Operation segment:

- Management said that Vietnam’s domestic telecom operations market is approaching its saturation stage and that CTR’s operations revenue growth in the future should be supported by the potential of the overseas market.

5. System integration & technical services segments:

- CTR expects government policies such as raising base salaries and the expected recovery of the retail market to support demand for the system integration and technical services segments.

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