- We downgrade our rating for ACG to MARKET PERFORM from OUTPERFORM despite raising our target price (TP) by 13% as ACG’s share price has rallied by 18% over the last three months.

- Our higher TP is mainly due to rolling our TP forward to mid-2025. This results in a 15% higher DCF-derived fair price and a 10% higher P/E-derived fair price (with a maintained target P/E of 11x). We continue to use a 50/50 mix of these valuations to set our TP.

- We keep our 2024/25/26F NPAT-MI forecasts broadly unchanged despite cutting our revenue growth forecasts to +4%/+9%/+11% YoY from +8%/+11%/+11% YoY, respectively, due to lower-than-expected Q1 2024 results and a slower-than-expected recovery in primary condo sales. This is offset by raising our GPM assumptions by 40bps/50bps/50bps, respectively, due to better-than-expected GPM on direct exports and expected further export demand recovery.

- Primary condo sales in HCMC and Hanoi weakened to eight-year lows in Q1 2024, even after a weak 2023, which we expect will affect ACG’s domestic sales in 2024-2025, as its products are typically installed in the final construction phase. However, we forecast 2024F revenue to grow 4% YoY from a low base due to recovering demand from exports and existing homes.

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