- We raise our target price (TP) for HDG by 8.7% to VND33,700/share and upgrade our rating to BUY from OUTPERFORM.

- Our higher TP is primarily driven by our (1) removal of a 10% legal discount risk, (2) 39% higher NPAT for Charm Villas, and (3) the positive impact of rolling forward our TP to mid-2026. 

- These factors (1), (2), and (3) together outweigh (4) a 10% decline in our energy segment valuation (mainly due to Hong Phong 4’s 93% lower valuation, delayed wind power projects by one-two years), (5) a 26% lower commercial real estate valuation (driven by our removal of CC3 and Alila Bao Dai) while our removal of earning contributions from the Dich Vong complex in Hanoi and Noongtha in Laos have minimal impacts on valuation.

- We cut our aggregate 2025-29F NPAT-MI forecast by 19% (respective changes of -10%/+15%/-26%/-38%/-9% for 2025/26/27/28/29F), mainly due to our (1) 24%/20%/26% lower aggregate NPAT-MI forecasts for energy/residential, real estate/commercial, and real estate segments, respectively, which outweigh (4) 70% lower Holdco expenses (page 3).

- We project 2025F NPAT-MI to jump 2.3x YoY, primarily driven by (1) 3.3x YoY earnings from the energy segment (lower provision expenses for Hong Phong 4 and YoY hydropower improvement), and (2) 3.2x YoY real estate NPAT.

- HDG’s valuation looks undemanding at 2025/26F P/Es of 10.8x and 7.1x, 20% and 47% lower than its power peers’ 4Y average P/E of 13.5x. The 2025F P/E implies a PEG of 0.2 based on a 2024-27F EPS CAGR of 67%. 

- Upside catalyst: Successful acquisition of new residential projects. 

- Downside risks: Residential project development delays, higher-than-expected land use fee right (LUR) of Charm Villas.

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