Investment Thesis 

–  Defensive industry providing essential goods and service, which stalely grow 10%/year without disruption.

–  Water supply is less impacted by Covid pandemic outbreak since the demand for house consumption grow but demand for manufacturing reduce, then canceling the negative impact.

–  Binh Duong population growth and high immigration rate are the base for future demand, higher than Hanoi and HCMC. FDI has been grew significantly and Binh Duong is in top 5 of FDI attraction.

–  Owning monopoly pipeline distributor Biwase in Binh Duong Province. Selling price will adjusted upward in 2023, estimated at average of 5%/year

–  Widen gap between BWE and TDM capitalization now reaches 250%, higher than average of 142% since TDM is holding 38.5% of BWE share outstanding.

Risk

–  Selling price is limited by authority.

–  Upside potential is limited by revenue while downside risk is not.

–  High cost of investment when expand to Dong Nai and Binh Phuoc

–  Pandemic impact on water using for manufacturing.

Recommendation:

Reflecting the fact mentioned above, we estimate that TDM’s price (not including BWE) is about 22,300 VND/share. We think current market value of BWE, reflect intrinsic value of BWE, which is from 33,000 VND/share to 40,000 VND/share. Then the value of TDM should be from 35,000 VND/share to 43,720 VND/share.