AST [OUTPERFORM +14.6%] - Revenue sharing scheme to dampen profit margins

- We lower our target price (TP) by 5% to VND64,500/share and downgrade our rating for AST from BUY to OUTPERFROM. AST’s share price has increased 10% over the last five months. Our lower TP is due to lower NPAT-MI forecasts for 2024F/25F/26F by 27%/17%/15%, respectively, partly offset by rolling our TP horizon from end-2024 to mid-2025.

- For 2024F, we (1) lower our projected sales per store to VND7.7bn (vs VND8.0bn previously) stemming from weaker-than-expected consumer sentiment and incomplete recovery of high-spending Chinese tourists, and (2) lower earnings forecast for VINACS - AST’s 26.7%-owned air catering services - following the restructuring of its major client, Bamboo Airways.

- Over the long term, we expect a higher leasing cost for AST due to ACV’s revenue sharing scheme, partly offset by higher new store openings in the medium-term.