HPG [OUTPERFORM +17.1%] - Valuation turns attractive against 2024-25F earnings growth

- We upgrade our rating for HPG to OUTPERFORM from UNDERPERFORM and raise our target price (TP) by 25% to VND29,4000/share.

- Our higher TP is mainly because 1) we roll over our target price horizon to end-2024, and 2) we increase our target P/E to 13.0x from 10.0x previously and using average 2024-25F EPS instead of 2024F EPS in our P/E multiple valuation to capture HPG’s high growth period following a cyclical low in earnings in 2023.

- We cut our 2023F NPAT-MI by 11% to VND6.8tn (USD284.5mn; -20% YoY) due to 1) lower margin assumption amid higher coal price assumption, and 2) higher FX losses. We keep our sales volume and ASPs assumptions across HPG’s steel product portfolio unchanged.