* DRC announced its Q3 2022 results with net revenue of VND1.4tn (USD56mn; +46% YoY) and NPAT-MI of VND77bn (USD3.2mn; +129% YoY).

* For 9M 2022, DRC’s revenue and NPAT-MI were VND3.8tn (USD158mn; +24.2% YoY) and VND227bn (USD9.4mn; +10.8% YoY), respectively.

* We attribute the larger YoY increase in NPAT-MI vs revenue in Q3 2022 to (1) 2.5-ppt higher GPM due to price hikes and input cost optimization, and (2) operating leverage as Q3 2021 revenue was significantly impacted by COVID-19.

* 9M 2022 revenue and NPAT-MI completed 69.2% and 60.3% of our respective full-year forecasts. Although Q4 typically is a high season for DRC’s exports, we foresee downside risk to our forecasts as DRC’s profitability trailed our expectation in 9M 2022, pending a fuller review.

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