COMPANY ANALYSIS REPORT
Thanh Cong Textile – Garment – Investment – Trading Joint Stock Company (TCM) is one of Vietnam’s leading textile and garment enterprises, operating a fully integrated production chain from Spinning – Knitting/Weaving – Dyeing – Garment. The company places strong emphasis on sustainable development (ESG), focusing on producing high-quality, environmentally friendly products while optimizing costs and shortening delivery time. TCM’s products are distributed domestically and exported to over 40 countries worldwide.
(*) Base case scenario: We believe that basic consumer goods, which are not classified as strategic items or of special national interest to the U.S., will be subject to significantly lower tariff rates than originally announced. In the textile and garment sector, we expect that tariffs imposed on Vietnam will be lower than those on China and not substantially different from direct competitors such as Bangladesh or India. In the short term, we anticipate a large volume of U.S.-bound textile orders will shift away from China due to tariff differences. Vietnam is expected to benefit from this trend, supported by its production scale and certain competitive advantages.
INVESTMENT THESIS
- Revenue Growth Driven by Asian Market. Asia remains TCM’s most important market, contributing approximately 70% of total revenue in 2024. According to a report by McKinsey & Company, the fashion industry in this region—particularly in Japan, South Korea, and India—is expected to grow positively in the coming years. The non-luxury fashion segment is anticipated to be the key driver of profit growth across the industry. TCM’s strategic partnership with major shareholder Eland (South Korea) not only ensures a stable order flow but also provides a solid foundation for sustainable medium- and long-term growth. As of the latest update, TCM has secured full order bookings for Q2/2025.
- Limited Impact from U.S. Tariff Policy. The U.S. accounted for approximately 18.7% of TCM’s total revenue in 2024, with a declining trend. As noted in the base case scenario, TCM is expected to partially benefit from the short-term order shift away from China. However, in its core Asian market, the company may face increasing competition from Chinese textile exports.
- Production Edge from Integrated Manufacturing Model. TCM is a pioneer in implementing a vertically integrated model encompassing spinning – knitting/weaving – dyeing – garment manufacturing. This structure allows the company to efficiently meet stringent standards on traceability and product quality, which is increasingly critical amid global trade uncertainties. The integrated model also strengthens TCM’s production capacity and supports long-term margin improvement.
- Earnings Upside from Real Estate Project. TCM is accelerating legal procedures for its TC Tower apartment project, expected to receive construction permits in January 2026, with sales potentially launching immediately afterward. The project is forecast to generate over VND 2,800 billion in revenue and over VND 1,100 billion in profit, with financial contributions starting in 2028.
- 2025 Earnings Growth Expected to Slow. We maintain a cautious outlook and forecast TCM’s 2025 revenue to reach VND 4,026.1 billion, up 5.7% YoY. The yarn and fabric segments are expected to grow by 6.3% and 5.8%, respectively. The garment segment, which accounts for the largest share of revenue, is projected to rise by 5.6%, though order volumes and selling prices are likely to face greater pressure after Q2. Gross margin is expected to decline to 15.7% (from 16.2% in 2024) due to lower average selling prices, partially offset by stable low cotton prices—the key input for textile production.
2024 BUSINESS UPDATE
- In 2024, TCM recorded net revenue of VND 3,810.5 billion, up 14.6% year-on-year, driven by a sharp increase in orders from the Asian market. Notably, revenue from South Korea surged by 59.7% to VND 1,077.1 billion, making it TCM’s largest export market. All of the company’s business segments posted double-digit growth.
- Pre-tax profit reached VND 350.4 billion, marking a strong 85.6% increase compared to 2023. Net profit margin improved significantly to 8.3%, up from 4.0% the previous year. This performance was supported by TCM’s focus on high-tech, high-margin orders and favorable input costs, particularly low cotton prices throughout the year. In addition, financial expenses dropped by 43%, and efficient cost control over selling and administrative expenses contributed efficiently to profit growth.
RECOMMENDATION
OUTPERFORM recommendation with a 1-year target price of VND37,600/share and an upside potential of 28.8%.
Valuation
- Using the Free Cash Flow to Firm (FCFF) discounted cash flow valuation method, we arrive at a 1-year target price of VND 37,600 per share.
- Risks: (1) Unfavorable outcomes in trade negotiations between Vietnam and the U.S.; (2) Slower-than-expected recovery in consumer demand in Asia and the U.S.; (3) Intensifying competition from both domestic and international rivals; (4) Delays in the execution of the real estate project.
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