- We raise our target price (TP) for VNM by 7% but downgrade our rating from BUY to OUTPERFORM as the stock has rallied ~15% since our latest update report dated June 3, 2024.

- Our higher TP is driven by increasing our (1) 2024F total sales of overseas businesses (i.e., exports (*), Driftwood in US and Angkormilk in Cambodia) by 9% and (2) 2024F GPM of overseas businesses by 240 – 340 bps. These changes result in increases of 5%/6%/6% in our 2024/25/26F NPAT-MI, respectively.

- As stated in our previous update reports, we view VNM's superior profitability and consistent dividend payments as key attractive qualities. Nonetheless, we remain cautious on the company’s long-term growth prospects due to its challenges in product premiumization because of its long-standing image as a national mass-market dairy brand. We project VNM to deliver a 2024-28F sales CAGR of 6% and corresponding EPS growth of 7%.

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