DIG [MARKET PERFORM +5.1%] - Deleveraging to reduce financial expenses amid weak sales - Update
  • 2022-12-20T00:00:00
  • Company Research

* We cut our target price for DIG by 47.5% to VND17,600/share but upgrade our rating from UNDERPERFORM to MARKET PERFORM as the company’s share price has declined 49% over the past three months. Our lower target price is mainly due to (1) our lower valuations across DIG’s project pipeline — especially for the Long Tan project as we extend this project’s timeline — (2) our 0.9-ppt higher WACC assumption and (3) applying a 30% discount to our estimated RNAV.


* We decrease our 2022F NPAT-MI forecast by 62% to VND382bn (USD15.4mn; -61% YoY) mainly due to our downward revision for revenue recognition at the Vi Thanh project. We continue to expect handovers at the Nam Vinh Yen and Vi Thanh projects to be the main contributors to our 2022F NPAT-MI forecast and expect no divestment gain vs VND862bn (USD35mn) in 2021.


* We forecast 2023F NPAT-MI of VND478bn (USD19.3mn; +25% vs 2022F), which is driven by continuing handovers at the Nam Vinh Yen and Vi Thanh projects. We forecast lower financial expenses YoY as a result of a lower expected debt balance as DIG completed buying back VND1.6tn (USD64.5mn) of bonds before maturity in November 2022.


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