We cut our target price for HT1 by 7% to VND16,700/share while maintaining our MARKET PERFORM rating.

Our lower target price is mainly due to 1) cutting our aggregate 2022-2026F NPAT-MI by 10% as a result of higher-than-expected input coal prices and HT1’s limited ability to raise its average selling price (ASP) to pass on higher production costs, and 2) raising WACC due to our higher risk-free rate assumption. These factors are partially offset by HT1’s higher cash balance at end-Q2 2022.

HT1 reported weak H1 2022 NPAT-MI of VND161bn (USD6.9mn; -52% YoY) despite revenue increasing 9% YoY to VND4.3tn (USD186.4mn), which was due to margin compression as higher selling prices could not catch up with surging input coal prices.