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Summary of Everpia (EVE VN)

Core Content

Everpia (EVE VN) is a leading company in the bedding and padding industry in Vietnam, with a strong market position and a strategic plan for growth. The stock is currently trading at VND19,500, with a target price of VND28,400, representing a 46% upside. The company has a 22% market share in the bedding industry and is the market leader in the middle-income bedding segment.

Key Financials

• Shares Issued: 27.51 million
• Market Cap (USD m): 25.60
• 3-mth Avg Daily Turnover (USD m): 0.02
• VN Index: 477
• Free float: N/A
• Major Shareholders:
  • Jae-Eun Lee: 18.9%
  • Red River Holding Fu: 12.5%
  • Tienphong Bank: 10.7%

Key Indicators

• ROE (annualised): 11.5%
• Net Cash (VND b): 68
• NTA/shr (VND): 25,071
• Interest Cover (x): 79.4

1H13 Results

• Bedding Revenue: Decreased 5% YoY to VND168b due to lower sales volume and ASPs.
• Padding Revenue: Increased 32% YoY to VND166b.
• Gross Margin: Contracted from 36% in 1H12 to 31% in 1H13 due to aggressive price cuts by competitors.
• EPS Growth: 1% in 1H13, with a forecasted 17% increase in 2014 and 16% in 2015.
• Net Profit: Increased 3% YoY to VND151b in 1H13, with a forecast of VND86b in FY13.

New Growth Drivers

1. Bedroom Furniture Business: Launching in Q3 2013 with exclusive rights to distribute products from EC, a Vietnamese company. Expected gross margin of 25%.
2. Spring Mattress Line: Seeking a joint venture with a local Vietnamese company to enhance its spring mattress line and learn advanced manufacturing techniques.
3. Export Expansion: Increasing export revenue to South Korea and the Middle East, with a subsidiary in Cambodia and potential partnerships in Malaysia and Laos. Expected export revenue to reach VND40b in FY13 and grow 30% annually from 2014.

Valuation and Performance

• Forward PER: 6.3
• Forward P/BV: 0.7
• Expected Earnings CAGR: 17% over the next three years
• DCF-based Target Price: VND28,400, which is 46% higher than the current price
• Net Profit Forecast: VND86b in FY13, increasing to VND117b by 2015
• ROE: Expected to rise from 11.5% in 2013 to 13.5% in 2015
• ROA: Expected to increase from 8.9% in 2013 to 10.2% in 2015
• Strong Balance Sheet: Low debt-to-equity ratio (0.25x), no long-term debt, and substantial cash reserves (VND107b).

High Potential in the Bedding Industry

• Bedding Segment: Accounts for 60% of total revenue and has high gross margins of 36%. Expected to benefit from rising urbanization and home ownership in Vietnam.
• Padding Segment: Surged 32% YoY to VND166b, contributing 50% of total revenue in 1H13. Expected to grow at 5% annually.
• Market Share: 31% in the padding industry as of 2012, with main competitors being Mirae Fiber VN Company and Poongchin Vina.

Strategic Expansion and Market Position

• Peak Seasons: Bedding peak is in Q4, and padding peak is in Q2 and Q3.
• Geographic Focus: Currently concentrated in the North of Vietnam, with Hanoi and Northern provinces accounting for 74% of sales.
• Competitive Edge: Targeting 4- and 5-star hotels, while Hanvico focuses on 3- and 4-star hotels.

Research Offices and Contacts

• Regional Research Offices:

  • Malaysia: Wong Chew Hann, CA (Head of Research)
  • Philippines: Luz Lorenzo (Head of Research)
  • Thailand: Sukit Udomsirikul (Head of Research)
  • Vietnam: Michael Kokalari, CFA (Head of Research)

• Key Contacts:

  • Hang Truong: (84) 8 44 555 888 (ext. 8085)
  • Alexander Garthoff: (852) 2268 0638
  • Other Contacts: Provided for various regions and industries.

Disclaimer and Disclosures

• The report is for general information only and not an offer to buy or sell securities.
• Past performance is not a guide to future performance.
• The report may contain forward-looking statements subject to risks and uncertainties.
• MKE disclaims liability for any losses arising from reliance on the report.
• Information is sourced from reliable but unverified third parties.