We maintain our BUY rating for VEA as we like the company’s large exposure to Vietnam’s extensive motorbike (2W) market and the long-term growth of the country’s auto (4W) consumption along with its robust dividend yields.

We cut our target price (TP) by 15% as we increase our cost of equity assumption by 100 bps and cut our aggregate 2022F-2025F NPAT-MI forecast by 6% mainly due to lower projected profit from VEA's associates in 2023. We also roll our TP horizon forward from mid-2023 to YE2023.

We expect passenger car (PC) and 2W industry sales to achieve respective CAGRs of 6% and 3% in 2022F-2025F as vehicle sales have risen in 2022 due to pent-up demand from COVID-19 in 2021, which will be followed by a fall in 2023 due to expected weaker consumer spending.