- We maintain our OUTPERFORM rating for QNS. In our view, QNS’s valuation looks appealing at our forecast 2023F-2025F EPS CAGR of 12%. Additionally, QNS’s TTM P/E of 9.6x is at a discount vs the five-year average sugar peer median TTM P/E of 13.8x that is comprised of a selected peer group of listed sugar companies in Vietnam.

- We increase our target price (TP) by 2% as we raise our aggregate 2023F-2025F NPAT-MI by 10%, which is mainly driven by a projected 4% CAGR for sugar net profit in 2023F-2025F vs a -2% CAGR in our previous forecast and in accordance with QNS’s plan to enhance volume as well as our expectation for a better demand recovery in 2024-2025. In addition, we roll our TP horizon forward to mid-2024 vs YE2023 as in our previous Update Report.

- We forecast NPAT-MI to decline by 5% in 2023F, which is mainly due to (1) lower projected soy milk volume as we see weak consumer spending on milk-based products and (2) an expected squeeze in sugar net profit margin due to rising sugarcane input costs and a softer ASP in 2023.

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