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VNM - Domestic sales continue growing quarter-over-quarter

• Q3 2023 sales reached VND15,637 bn (+2.9% QoQ; -2.8% YoY). The lower than last year sales is due to the high base effect while the domestic channel becomes the growth driver of both quarter-over-quarter and year-over-year basis. Q3 2023 net profit continued growing to VND2,493 bn (+13.4% QoQ; +8.5% YoY) due to (1) improved gross margin given the easing of input costs; and (2) SG&A optimization.
• Based on 9M2023 positive results, we calculate that the 2023 sales will show a positive growth, to VND62,868 bn (+5% YoY), after experiencing a negative growth in 2022. Similar to the top-line, we believe that 2023 NPAT-MI will draw a better performance, at a growth of +7% YoY to VND9,081 bn. The equivalent EPS is VND3,910 (+8% YoY).
• We believe that VNM ‘s growth indicators in 2H2023 will continue to enhance the 2024 performance. Therefore, we predict that the 2024 sales and NPAT-MI to be VND65,641 bn (+4% YoY) and VND10,068 bn (+11% YoY), respectively. The equivalent EPS will be VND4,336 (+11% YoY).
• We combined FCFF valuation model (50%) and multiples comparison (50%) with an applied 2024 P/E of 19.0x, producing the target price of VND87,600. For the 2024 period, we lower the targeted P/E to 19.0x from 21.0x in the 2023 period to reflect the weak sentiment of Vietnam stock market. Adding an expected cash dividend of VND3,850, the 12-months expected return is 33% compared to the closing price on Nov 13rd 2023, equivalent to BUY recommendation