- VNM released its H1 2022 results, including revenue of VND28.8tn (USD1.3bn; -0.3% YoY) and NPAT-MI of VND4.3tn (USD189mn; -20% YoY), completing 45% and 43% of our respective full-year forecasts. In Q2 2022, VNM’s revenue was VND14.9tn (USD649mn; -5% YoY) with NPAT-MI of VND2.1tn (USD91mn; -27% YoY).

- Due to the negative impact from inflation, we believe Vietnam’s FMCG consumption has been weak as its value growth slid from +2% YoY in Q1 2022 to -2% YoY in 5M 2022, according to AC Nielsen. VNM’s H1 2022 results also indicate weak domestic sales while gross margin was under siege due to rising input costs. Additionally, increased selling expenses pulled down bottom-line growth. Overall, we see potential downside risk to our current projections, pending a more extensive review.

- Based on our estimate from VNM’s parent (separate) financial statements, VNM’s domestic dairy revenue ex-MCM (Moc Chau Milk – VNM’s indirect subsidiary) shrank by 2% YoY in H1 2022 vs a 4% YoY increase in Q1 2022. We believe the growth was significantly cushioned by higher selling prices as VNM conducted two price hikes (one in March 2022 and another in May 2022) with the cumulative average price increase amounting to approximately 5% YoY in H1 2022, per management. Furthermore, we believe traditional trade — VNM’s primary distribution channel — lagged in H1 2022 as modern trade increased 30% YoY in Q1 2022 and 6% YoY in Q2 2022.

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