We raise our target price for BSR by 17% to VND20,500/share and maintain our BUY rating. Our increased TP is due to our 17% higher projected 2023-2024 NPAT as a result of our higher diesel (DO) spread assumptions.  

We forecast 2023 NPAT to drop ~40% YoY to VND8.5tn (however, this is still ~10% higher than the previous cyclical peak in 2017) as we expect spreads to cool from their highs in 2022 and volume to decline due to periodic maintenance/turnaround.

The average DO spread in 2022 beat our forecast, and it has remained resilient in early 2023. We are optimistic that the gradual reopening of China can support stronger global petroleum demand, which should outweigh a potential economic slowdown and result in a higher gap between supply & demand in 2023.