HSG [MARKET PERFORM -2.7%] - GPM to compress in Q4 FY24 as steel prices decline

- We upgrade our rating for HSG to MARKET PERFORM from UNDERPERFORM as we raise our target price (TP) by 13% to VND19,600/share.

- Our higher target price is driven by rolling our TP to end-FY2025 (end-Sep CY2025) and respective 1%/6%/6% increases in 2026/27/28F NPAT-MI forecasts, which all outweigh 10%/6% cuts to our FY2024/25F NPAT-MI forecasts, respectively.

- The revised FY2024F NPAT-MI forecast reflects (1) a 60bps reduction in our GPM forecast and (2) a 20bps increase in SG&A/sales, offsetting a lower effective tax rate assumption (revised to 10% from 20%) following a lower-than-expected 9M FY2024 effective tax rate.