DRC - Weak domestic consumption weighs on 2023 earnings

- We attended DRC’s analyst meeting and AGM in Da Nang on April 26 & 27.

- For 2023, DRC guides for net revenue of VND5.0tn (USD215mn; +3.2% YoY) and NPAT of VND264bn (USD11mn; -14.1% YoY), which represent 100% and 73% of our respective full-year forecasts. While DRC has a track record of exceeding its profit guidance, we see potential downside risk to our forecast, pending a fuller review.

- Management expects (1) weak domestic consumption due to the negative impact of global economic headwinds and (2) intensifying competition will lower the company’s earnings throughout 2023 as the domestic market generates higher profitability than export markets.

- The AGM approved an FY2022 total cash dividend of VND1,800/share. The advance cash dividend of VND500/share was paid in January, and the remaining VND1,300/share will paid before the end of 2023.