·         Q1 2023 net sales and NPAT-MI were VND993 bn (-37.9% QoQ; -40.2% YoY) and VND4 bn (-92.6% QoQ; -93.6% YoY), respectively. Mercedes car sales were down on an unfavorable basis of comparison and high loan rates, but repair services sales went up driven by stricter car registration regulations. The significant negative growth of net profit is due to higher SG&A and financial expenses.   

·         2023 sales are forecast to be VND6,627 bn (-2.2 %YoY) based on 1) higher selling prices; and 2) higher market share. NPAT-MI to reach VND VND236 bn (-1.6% YoY). In the context of weak sales and rising SG&A costs, the expected commissions from Mercedes-Benz Group cannot help to deliver positive net profit growth. The equivalent EPS is VND3,274.

·         With the combination of FCFF valuation model (50%) and multiples comparison (50%) with an applied P/E of 5.8x, our target price is VND20,200. Adding a cash dividend of VND500, the 12-months expected return is 14.4% compared to the closing price on May 23rd 2023. We suppose that HAX shares may could bottom out when any signals of sales growth appear (might be in 2024). Therefore, we recommend to ACCUMULATE this stock for the long term.