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HAX - Mercedes-Benz cars demand is expected to be high in 2H2023

• Q2 2023, HAX sales and net profit were VND797 bn (-19.7% QoQ; -48.4% YoY) and VND2 bn (-51.5% QoQ; -97.9% YoY), respectively. The net profit growth was met by difficulties, including weak sales and higher operating costs.  In 1H2023, HAX ‘sales and net profit were VND1,780 bn (-44.2% YoY) and VND5 bn (-96.1% YoY), respectively. This result only met 3% of the 2023 profit target.
• HAX ‘s expects strong sales in 2H2023 that will compensate for the modest sales of 1H2023. The main reasons are the decrease in loan rates and the decision to lower registration fees. In summary, we forecast 2023 sales and net profit to reach VND6,627 bn (-2.2% YoY) and VND228 bn (-4.8% YoY). The equivalent basic EPS is VND2,643 (-37.1% YoY).
• Based on the combination of FCFF valuation model (50%) and multiples comparison (50%), with an applied P/E of 6.6x, our new target price is VND18,300. Adding a cash dividend of VND500, the 12-months expected return is +19% compared to the closing price on Sept 20th 2023. Based on 1) the growth outlook of HAX since 2H2023; and 2) the positive expectations on Haxaco‘s business performance has partly been reflected on the share price movement, we recommend to ACCUMULATE this stock for the long term.