We lower our target price (TP) for MSN by 8% and downgrade our rating from BUY to OUTPERFORM.
 

Our lower TP is primarily driven by our (1) lower valuation for Masan Consumer Holdings (MCH) that is derived from our 3% lower projected aggregated EBIT for MCH in 2023-2024F, and (2) higher net debt as of YE2022. In this Update Report, we add an equity investment of VND1.5tn made by MSN for a 25.1% equity interest in Trusting Social Joint Stock Company to our valuation.

We remain positive on the outlook for MSN’s leading and wide-ranging consumer businesses to benefit from long-term consumption growth in Vietnam. That said, we expect weak consumption to overhang MSN’s consumer retail business throughout 2023. We assume more vibrant consumer spending in 2024. Furthermore, we expect higher financial expenses for MSN in the short term due to higher interest rates.