- We cut our target price (TP) by 30% to VND23,500/share but reiterate our OUTPERFORM rating as DRC’s share price has dropped 32% over the last three months. 

- Our lower TP is mainly driven by (1) a 13% cut in our aggregate 2022-2024F NPAT-MI forecast and (2) our higher WACC assumption (13.5% vs previously 12.6%) resulting from our higher equity risk premium (ERP) and cost of debt assumptions, which are partly offset by the positive effect of rolling our TP horizon forward to end-2023 and increasing our terminal growth rate assumption to 2%.

- For 2023F, we forecast revenue of VND5.6tn (USD227mn; +8.9% YoY) and NPAT-MI of VND323bn (USD13mn; +0.3% YoY). Our sluggish top-line growth forecast is mainly driven by our expectation for declining demand in 2023F due to global economic headwinds. Our 2023F NPAT-MI forecast is further dragged by our expectations for higher production costs and weaker pricing power.

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