Result Update Report: VNM - Lower input costs are expected to take effect in 2023
Besides the downward trend of input costs, we suppose that the new sales strategy is another investment key point of VNM which should bring visibility to earnings growth in the long term. In the near-term outlook, the growth partly depends on the increase in the number of export orders. Under the advantage of strong cash flow and healthy capital structure, we believe that once the company shows signals of sales growth, it will create demand for the stock, especially institutional money.
Combining FCFF (50%) and multiples comparison (PER) (50%), our target price is VND81,100. Adding a cash dividend of VND3,850, the 12-months expected return is 23% compared to the closing price on Jun 23rd 2023. The stock price has shown a downward trend since 2021 under the disappointment of investors with negative earnings growth for two consecutive years. In the viewpoint of 1) the negative expectation is reflected on the stock price; and 2) the potential of the positive profit growth will come. We have a BUY recommendation on this stock for the long term.
Vietnam Dairy Products Joint Stock Company (Vinamilk) is a Vietnam-based company engaged in the food processing industry. It is involved in the manufacturing, marketing and distribution of dairy products, such as milk of various forms and milk derived products, as well as confectioneries and non-alcoholic beverages. The Company also provides packaging and logistics services, along with other technical support to cultivation and breeding processes to farmers.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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