MBS revised down its 2025-26 wood revenue by 3.6%/9.6% compared to previous estimates.

Impact of the US tariffs

MBS revised down its 2025-26 wood revenue by 3.6%/9.6% compared to previous estimates. Wood revenue is projected to increase modestly by 4.7%/5.9% yoy:

First, faced with US tariff pressure, Vietnam has proactively sought to reduce its trade surplus. MBS anticipates Vietnam may negotiate a lower tariff rate of 15-20%. However, key Vietnamese wood export competitors like Canada, Mexico, Italy, Indonesia, and Malaysia are taking similar steps. Based on prior US criteria, these competitors are likely to face lower reciprocal tariffs than Vietnam's 46% due to smaller trade surpluses with the US. Consequently, MBS expects Vietnamese wood products to face increased competitive pressure from rivals with lower tariff burdens.

Second, the US housing market is expected to remain challenging throughout 2025 and H1/26. US homebuyers' purchasing power remains weak due to rising home prices and persistently high 30-year mortgage rates (above 6%). According to the National Association of Home Builders, residential construction materials are trending upwards again due to tariffs, further increasing home prices and reducing affordability. Additionally, a projected resurgence of inflation will likely dampen demand for non-essential consumer goods, including wooden furniture, further contributing to a sharp decline in export volume during 2025-26.

Third, PTB is slated to commence operations at its wood pellet plant from June 2025, which MBS projects will contribute approximately VNDbn126.7/215.4 in revenue in 2025-26.

Export stone facing headwinds

MBS revised down its 2025-26 stone revenue by 10%/10.7% compared to previous estimates. After adjustment, stone revenue is projected to increase by 3.5%/7.7% yoy:

The quartz stone product line, primarily export-oriented and positioned in the lower segment, faces significant competitive pressure from the new US tariffs.

For granite and marble, MBS anticipates revenue growth will be primarily driven by public investment project disbursements and the expected recovery of the real estate market in 2025-26. PTB currently holds supply contracts for two major projects: Noi Bai T2 terminal (VNDbn 40 revenue expected by 2025 completion) and Long Thanh Airport (VNDbn170 revenue starting in 2026). While new apartment supply in Ho Chi Minh City significantly declined in Q1/25 due to limited new launches, MBS expects improvement in the remaining three quarters of 2025 as new projects commence sales. According to CBRE, Ho Chi Minh City's new supply is projected to increase by 28.5% to 9,000 units in 2025 and further by 17.2% to 10,550 units in 2026, boosting domestic stone product sales volume.

MBS reduces its 2025-26 stone GPM forecast by 9.5/6.1 %points due to pricing pressure to maintain market share. After adjustment, the stone segment's GPM is projected to increase by 0.7/4.4 %points in 2025-26, primarily from the absence of mine licensing costs.

Peak in real estate handovers

MBS raises 2025-26 real estate revenue by 64.5%/89% compared to previous estimates, anticipating robust real estate revenue growth during this period (552.3%/2.6% yoy):

Phu Tai Residence handed over an additional 29 units in Q4/2024, reaching 501 out of 634 units delivered. PTB's management notes signs of recovery in the Quy Nhon real estate market in 2025, leading us to anticipate accelerated handover progress for Phu Tai Residence and Phu Tai Central Life in 2025-26.

For Phu Tai Residence in 2025, MBS expects PTB to complete the handover of the remaining 133 units, consistent with its previous forecast.

For Phu Tai Central Life, MBS projects accelerated progress, with 30% of units (110 units) handed over in 2025 (up 18% from the previous forecast of 94 units) and the remaining 70% completed in 2026.

MBS recommends a hold for PTB with a target price of VND 53,700 (a 27.2% downward revision from its previous forecast), based on key points:  (1) The US housing market recovery remains sluggish due to weak purchasing power and anticipated inflation from tariffs dampening non-essential goods demand; (2) Vietnamese products in the US market are expected to become less competitive due to higher reciprocal tariffs compared to competitors, leading to pricing pressure and margin contraction; (3) Completion of remaining Phu Tai Residence unit handovers and initial revenue recognition from Phu Tai Central Life are expected to drive a significant increase in real estate revenue.