- We trim our target price (TP) for REE by 0.7% but upgrade our rating from OUTPERFORM to BUY as the company’s share price has declined by 15% over the past three months. 

- Our slightly lower TP is mainly due to a 7.9% cut in our aggregate 2023-2027F NPAT-MI forecast (4.9%/6.8%/6.8% cuts for 2023/24/25F, respectively), which outweighs the positive effect of rolling our horizon to end-2024. Our lower aggregate 2023-2027 NPAT-MI forecast is primarily driven by a 9.7% reduction in our aggregate 2023-2027 NPAT-MI projection for REE’s power segment following weaker-than-expected 9M 2023 results and as we reduce our assumptions for its total additional wind and rooftop solar power capacity in 2024-2027 by 50 MW and 50 MWp (to 350 MW and 350 MWp), respectively, due to the slow progress of the new pricing mechanism.

- We forecast 2023F NPAT-MI of ~VND2.5tn (-8.5% YoY) mainly due to 26% YoY/27% YoY lower earnings from power and M&E, respectively, which outweigh real estate earnings quadrupling to VND272bn. We project 2024F NPAT-MI to increase by 8% YoY thanks to (1) a 31% YoY surge in office leasing earnings with the E-town 6 entering commercial operation in early 2024, (2) a 11% YoY increase in power earnings due to a 90% YoY jump in 2024F earnings for the 23%-stake Pha Lai Thermal Power JSC. (HOSE: PPC) (please see our PPC Update Report, dated October 25, 2023 for details) as well as the addition of 50 MW of wind power and 50 MWp of rooftop solar power, which outweigh weaker hydropower performance, and (3) a robust recovery in M&E earnings (with no provisions for bad debts as in 2023).

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