- We reiterate our MARKET PERFORM rating for DIG despite cutting our target price by 24% to VND13,400/share as the company’s share price has declined 20% over the past three months. Our lower target price is mainly due to our lower valuations across DIG’s projects — especially for the Long Tan project, which accounts for 51% of the 13% decrease in our total project NAV.

- We forecast 2023F NPAT-MI of VND199bn (USD8.4mn; +36% YoY), which is mainly driven by ongoing handovers at Nam Vinh Yen and the start of Vi Thanh handovers — 58% lower than our previous forecast as we lower our assumption for revenue recognition at these two projects due to slower expected presales of land plots. We project 2023F EBIT to drop 8% YoY, which outweighs our lower assumption for financial expenses in accordance with the company’s plan to buy back VND1.0tn (USD42.4mn) of bonds that was announced on March 14, 2023.

- DIG’s business model focuses on intensive land bank acquisition and land clearance before commercializing a project. As such, we believe capital raising is needed over the medium term, but we think this will be challenging due to (1) the postponement of DIG’s rights issuance plan (see page 7) and (2) continuing bond buybacks. As a result, we expect project development to be slower than our previous projections, thus affecting the medium-term profit outlook.

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