We upgrade CTD to MARKET PERFORM from UNDERPERFORM despite cutting our target price by 38% to VND37,500/share as CTD’s share price has corrected 51% over the last three months.  

Our lower target price is due to 1) decreasing our 2022-2026F aggregate NPAT-MI by 47% because of our lower projected EBIT margin and signed contract value over the forecast period, 2) increasing our WACC assumption to 16.4% from 13.0%, and 3) reducing our target P/E to 7.5x from 8.0x. These factors are partially offset by rolling our target price horizon forward to end-2023.

CTD reported a net loss of VND4bn (USD142,600) in Q3 2022 vs net losses of VND12bn (USD0.5mn) and VND24bn (USD1.0mn) in Q3 2021 and Q2 2022, respectively. This was due to stagnant domestic construction activities and high provision expenses for legacy projects. In 9M 2022, CTD’s NPAT-MI was VND2bn (USD73,900; -98% YoY).