HSG [OUTPERFORM +17.5%] - HRC price correction to weigh on remainder of FY2022

- We trim our target price by 2% to VND24,800/share for HSG while maintaining our OUTPERFORM rating.

- Our 2% lower target price is driven by 1) our 16% decrease of aggregate FY2022-2026F NPAT-MI as we forecast a lower input – output spread will weigh on margins, in addition to 2) a higher WACC due to a 50-bp increase in our risk-free rate assumption. These factors are partially offset by rolling over our target price horizon to end-FY2023 (September 2023).

- Despite plummeting YoY from a historic high in Q3 FY2021, HSG’s Q3 FY2022 NPAT-MI of VND265bn (USD11.4mn) improved QoQ on the back of gross margin expansion. For 9M FY2022, HSG’s NPAT-MI was VND1.1tn (USD48.8mn; -66% YoY).