VNM - Expect double-digit net profit growth YoY in Q4 2023
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· Q2 2023 sales and net profit reached VND15,195 bn (+9.2% QoQ; +1.8% YoY) and VND2,198 bn (+18.4% QoQ; +5.5% YoY), respectively. The domestic market is the growth driver. Net profit rose at a higher pace than revenue, encouraged by 1) the downward trend of imported raw milk powder prices; 2) SG&A optimization; and 3) rising financial income. · We forecast 2H2023 net sales and NPAT-MI of VND33,419 bn (+7.3% YoY) and VND4,973 (+19.3% YoY), respectively. Assuming that prices of imported raw milk powder tends to decrease under low demand from China, the gross margin is expected to see an upward trend between Q3 and Q4 2023. Together with the low base of Q4 2022, Q4 2023 net profit is forecasted to present high double-digit growth YoY. · We maintain our forecast on VNM ‘s 2023 sales at VND62,532 bn (+4.3% YoY), but revise up 2023 NPAT-MI to VND9,028 bn (+6.0% YoY), equivalent to a 2023 EPS of VND3,888 (+7% YoY). The main reason is that the price of imported raw milk powder decreased faster than expected. · Combining FCFF valuation model (55%) and multiples comparison (45%) with an applied 2023 P/E of 21.0x, our new target price for VNM is VND87,600, which is higher by 8.0% compared to the latest target price (VND81,100) on Jun-2023. Adding an expected cash dividend of VND3,850, the 12-months expected return is 26% compared to the closing price on Aug 22nd 2023. Therefore, 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.
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