- We cut our target price (TP) for BSR by 6% to VND20,400/share but upgrade our rating from MARKET PERFORM to OUTPERFORM rating as the share price has dropped by 18% from its peak in mid-September 2023. Our lower TP is mainly due to increased WACC from a lower assumed leverage ratio which outweigh 3% higher aggregate 2023-2025F NPAT-MI forecast (4%/2%/3% in 2023/24/25F), driven by higher crack spreads (output price minus input prices) assumption for 2023F and assumed higher inventory provision writeback for 2024-2025.

- We raise our 2023F reported NPAT-MI by 4% to VND8.4tn (-43% YoY), mainly because we increase our crack spreads assumption. We also raise our 2024F reported NPAT-MI by 2% to VND7.4tn (-12% YoY), mostly due to a higher inventory provision writeback. The YoY decrease is mainly from (1) lower sales volume because of planned maintenance and (2) lower crack spreads, which are partly offset by ~ a VND476bn inventory provision writeback based on projected flat YoY oil price assumptions vs the projected 16% YoY decline in 2023.

- BSR’s valuation looks attractive with 2023/24F EV/EBITDA of 2.8x/3.4x, 70%/65% lower than the eight-year average multiple of its selected regional peers. Projected 2024 P/B at 0.9x.

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