- We downgrade our rating for VHC to OUTPERFORM from BUY despite increasing our target price (TP) by 10% as the share price has increased 12% over the last two months. We maintain our expectation for VHC’s bright long-term growth outlook, which is led by (1) the strengthening 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 higher TP is driven by our higher aggregate 2024F-28F NPAT-MI forecast by 7% (respective changes of -7%/+1%/+4% in 2024F/25F/26F NPAT-MI forecasts), as we factor in VHC’s twofold expansion in C&G capacity in 2024/25. We also expect VHC’s frozen filet export volume to recover to the average 2018-2023 level in 2024. 

- Our TP puts VHC’s 2024F/25F P/E at 10.2x/7.7x vs its average three-year TTM P/E of 10.1x and our projected 2024F-26F EPS CAGR of 28%.

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