- We maintain our UNDERPERFORM rating for HPG despite raising our target price (TP) by 21% to VND23,500/share. HPG’s share price has increased 27% over the last three months and 56% YTD as the company’s earnings turned around in H1 2023.
- Our higher TP is mainly because 1) we now apply higher 2024F EPS instead of the average 2023-2024F EPS in our P/E multiple valuation, 2) we increase our target P/E to 10.0x from 8.0x, and 3) we decrease our WACC assumption to 13.3% from 13.5%.
- We cut our 2023F NPAT-MI by 16% to VND7.9tn (USD325.7mn; -9% YoY) due to our lower margin assumption as 1) the recovery in H1 2023 was weaker than our expectation and 2) as we lower our steel selling price assumptions across products amid the slow global demand recovery.