- We reiterate our BUY rating for VIC but cut our target price by 19.8% to VND76,100/share, which is mainly due to our 20% conglomerate discount on our sum-of-parts valuation of VIC (see Figure 6).

- We forecast VIC’s 2023F EBIT at VND1.2tn (USD50mn) vs an EBIT loss of VND10.6tn (USD450mn) in 2022 as we expect strong property sales recognitions and a recovery of the retail leasing segment to more than offset EBIT losses for the industrial and hospitality segments. We decrease our 2023F EBIT forecast by 88% mainly due to (1) VHM’s bulk sales in Q1 2023 recognized as financial income and (2) a higher proportion of property deliveries under business cooperation contracts (BCCs), which have lower margins. We also revise down our 2024/25F EBIT forecasts by 3%/21%.

- A sum-of-the-parts valuation using the current market valuation of VIC, Vinhomes (VHM) and Vincom Retail (VRE) suggests the implied market valuation of VIC’s effective ownership of other assets — including VinFast, Vinpearl, Vinmec and VinSchool — at -USD0.3bn, which we find unreasonably low vs our valuation for these assets of USD2.7bn (see Figure 7). We believe the upside of VHM and VRE (see our May 12 VHM Update Report and May 18 VRE Update Report), which is based on our valuations for these two stocks, makes VIC’s current share price attractive. 

- Downside risks: Slower-than-expected sales launches of new mega property projects; slower-than-expected car deliveries.

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