- We edge up our target price (TP) for REE by 0.4% but downgrade our rating from BUY to OUTPERFORM as the company’s share price has increased 11% over the past three months. 

- Our slightly higher TP is mainly due to our higher valuation for REE’s hydropower segment (driven by our higher aggregate 2023-2027F NPAT-MI forecast for 52%-stake Vinh Son Song Hinh Hydropower JSC (HOSE: VSH) as well as the incorporation of 29%-stake of Su Pan 2 Hydropower JSC (UPCoM: SP2)) and REE’s higher cash balance at end-Q2 2023, which slightly outweigh our lower valuation for its wind power segment (as a result of delaying 400 MW of new wind power capacity over the forecast period by one year and removing our 2% USD appreciation vs VND assumption  from 2026 onward). 

- We keep our aggregate 2023-2027F NPAT-MI forecast nearly unchanged.  We forecast 2023F NPAT-MI of ~VND2.6tn (-4% YoY) mainly due to 12% YoY lower power earnings and 33% YoY lower M&E earnings, which outweigh real estate earnings quadrupling to VND272bn. 

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