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HAX – Looking forward to the recovery of luxury car consumption and the new MG business

• In Q4-2023, HAX's net revenue and NPAT gained VND 1,077 bn (or USD 45 mn, -3.4% QoQ, -32.6% YoY), and VND 22 bn (or USD9 mn, +170% QoQ, -96% YoY), respectively, resulting in 2023 EPS of VND 375. It is due to the bleak purchasing power for luxury automobiles despite the support from the decision to cut car registration fee by 50%.
• In 2024, we project that the company's net revenue and NPAT will reach VND 5,237 bn (or USD 219 mn, +31.5% YoY) and VND 119 bn (or USD 5.0 mn, +244% YoY), respectively, resulting in an EPS of VND 1,275. It is driven by (1) the rehabilitation of luxury automobile demand from the 2023 low-base; and (2) NPM will improve by +162 bps YoY thanks to the end of the pressure from “difficult-to-sell” inventories and high interest rate level.
• We recommend to ACCUMULATE this stock with a one-year target price of VND 16,100/share, based on two methods: FCFF and P/E (12.5x), with respective weights of 50% and 50%. Combined with an expected cash dividend of VND 300 per share over the next 12 months, the total expected return is 10.8% compared to the closing price on Feb 22^nd, 2024.