What will drive CTR’s profit growth?

As of 8M24, CTR’s revenue reached VND7,935bn (11% yoy); pre-tax profit amounted to VND422.7bn (4% yoy), completing 63% of the yearly target. The TowerCo revenue grew robustly 42% yoy, driven by the acceleration in tower construction of 400 towers per month, following Viettel’s successful acquisition of band B1 in March 2024. CTR’s construction segment posted a 29% yoy revenue growth, bolstered by a strong rise in civil construction activities, while other segments such as operations and technical solutions&services maintained stable revenue growth.

CTR’s ecosystem is tied to the parent company, including telecom construction, operations, and TowerCo, as key profit drivers for CTR, fueled by the government-led push for rapid 5G network expansion by 2030. Additionally, TowerCo, the company's main growth engine, is expected to rise during this period, with the trend of infrastructure sharing being strongly encouraged. With a plan to develop 3,000 towers annually from 2024 to 2026, revenue is projected to grow at a 35% CAGR. Tendency rates are expected to improve by 2% annually, supporting profit margins. As a result, EBITDA grew at 38% CAGR for the period 2024-2026 per MBS's view.

MBS anticipates CTR’s consolidated revenue growth during 2024-2026 to reach 13% CAGR, driving net profit growth of 14% CAGR. TowerCo is expected to be the primary growth driver, while other business segments are forecasted to grow steadily at 11% CAGR.

CTR aligns with the trend of investing in companies connected to the development of the "new economy." The 5G network is a foundation for the development of various intelligent IoT (Internet of Things) solutions, helping enterprises improve production capacity and efficiency while simultaneously requiring the collection and storage of vast amounts of data. “We believe that the commercialization of 5G will be a crucial factor in continuing to attract FDI (foreign direct investment) flows into Vietnam in the coming years, and leading telecom companies will benefit from future revenue growth,” said MBS.

The accelerating 5G network rollout and commercialization in Vietnam, projected until 2030, will be the main driver of CTR's profit growth in the coming period. Notably, the TowerCo segment is expected to be the primary growth engine, as the trend of infrastructure sharing among telecom operators is forecast to intensify, aiming to reduce the pressure of investment and operational costs.

From 2019-24, CTR maintained revenue growth at approximately 20% CAGR and net profit at 25.6% CAGR, significantly outpacing capital growth at around 11.0% CAGR. MBS believes CTR’s long-term market capitalization has room for growth to catch up with its net profit growth of 17% CAGR between 2025-2030. Furthermore, the 2025 EV/EBITDA is expected to reach 11.0x, 15% lower than the industry average. Currently, most TowerCo markets in the region have passed the development stage, implying that valuation potential for emerging markets, like Vietnam’s TowerCo sector, remains higher compared to more saturated markets.

MBS recommends a positive outlook with a target price of VND 153,100 per share (upside potential of 16%). The valuation is based on two equally weighted methods:

First, 10-year DCF method (WACC: 11.4%; CoE: 14.7%; LTG: 1.0%). MBS believes this method is appropriate given the company’s business model's strong correlation and relatively stable cash flows.

Second, target EV/EBITDA of 13.0x, reflecting a reasonable average industry EV/EBITDA in 2024-2025. MBS finds the EV/EBITDA method particularly suitable for telecommunications companies due to (1) their capitalintensive nature with large investments in fixed assets; and (2) stable cash flows, where EBITDA largely eliminates non-cash factors, focusing on operating profit rather than the effects of capital structure.