We downgrade our rating for TLG to OUTPERFORM from BUY despite increasing our target price by 19% to VND60,000/share as TLG’s share price has increased 33% over the last three months.

Our higher target price is due to the positive impact of 1) an 8% increase in our aggregate 2022-2026F NPAT-MI as we are more positive on the outlook for gross margins, 2) lower assumed capex for the Thien Long - Long Thanh expansion project, and 3) a higher cash balance at end-Q2 2022. The impact of these factors is partially offset as we increase our WACC assumption as a result of raising our risk-free rate assumption to 6.0% from 5.5%.

TLG achieved robust H1 2022 NPAT-MI of VND300bn (USD12.9mn; +71% YoY) as sales recovered from a low base in 2021 due to COVID-19 while margins expanded.