- We upgrade our rating to BUY from OUTPERFORM for VHC despite cutting our target price (TP) by 7% as the share price has declined 11% in the last two months. We believe VHC’s long-term growth outlook is bright due to (1) the strong position of its frozen pangasius filets in the global whitefish market and (2) sustainable growth from the high-margin collagen & gelatin (C&G) business.

- Our lower TP is driven by the cut of our aggregate 2024F-28F NPAT-MI forecast by 7%. That is mainly because we lower our 2023F earnings projection by 25% following lower-than-expected profitability in Q3 2023. We expect VHC’s earnings to recover in 2024 and return to its 2022 level in 2025. These are partly offset by rolling over our TP to end-2024.

- Our TP puts VHC’s 2023F/24F P/E at 12.9x/8.3x vs its average three-year TTM P/E of 10.0x and our projected 2023F-25F EPS CAGR of 24%.

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