- We lower our target price (TP) for VNM by 10% but maintain our BUY rating. We view VNM’s valuation as attractive despite short-term subdued demand for dairy products, as it is traded at 2025F P/E of 14x - a discount of ~17% vs the median of our Asian selected peers’ TTM P/E of 17x, coupled with a 7% dividend yield.

- Our lower TP is mainly driven by (1) a 9% downward revision to our aggregate 2025-27F NPAT-MI projection and (2) a reduction in our target P/E to 17x (vs 18x previously) to align with the median of our Asian selected dairy peers’ TTM P/E (Figure 5). The negative impact of these factors is partially offset by rolling our TP horizon forward to mid-2026. Considering emerging macroeconomic uncertainties and our observation of weaker-than-expected domestic consumption of milk-based products over the past four months, we reduce our respective forecasts for aggregate 2025-27F sales and operating profit for VNM by 5% and 12%. 

- In 2025/26, we reduce our NPAT-MI forecasts by 7%/9%, respectively. We forecast a sales CAGR of 5% for VNM in 2025-29F, corresponding to an EPS CAGR of 6%.

Powered by Froala Editor