We maintain our OUTPERFORM rating as we believe there is a bright growth outlook for VHC’s high margin collagen and gelatin (C&G) business. Meanwhile, we expect flat sales volume growth of 1% YoY in 2023 as global pangasius fillet demand has weakened since Q4 2022.

We increase our target price (TP) by 7%, which is mainly led by increasing our earnings projections for the frozen fillet and C&G segments by 11% in 2024F-2025F as we expect a stronger recovery of fillet demand and an accelerating profit contribution from the C&G business.

We forecast an EPS CAGR of 19% in 2023F-2025F. Our TP puts VHC’s 2023F P/E at 9.4x vs its five-year average TTM P/E of 7.7x, which we believe is justified