We cut our target price (TP) for FRT by 18% and but maintain our OUTPERFORM rating as the stock price has dropped 25% in the last three months.

Our lower TP is mainly due to: (1) a 32% cut in our aggregate 2023F-2025F NPAT-MI, primarily owing to our 50% cut in FPT Shop’s aggregate NPAT-MI over the same period, and (2) raising our WACC assumptions due to our higher equity risk premium (ERP) and higher cost of debt, partially offset by rolling over our target price horizon to end-2023.

We expect the current global supply shortage of iPhones to put pressure on FRT’s earnings growth as iPhone sales account for 29% of FRT’s overall revenue. Additionally, we expect weak consumption amid economic slowdown to weaken the sales of FPT Shop’s laptops and other smartphone brands.