VNM [OUTPERFORM +14.2%] - Gradual profitability recovery on lower input costs

- We cut our target price (TP) for VNM by 5% but maintain our OUTPERFORM rating.

- Our lower TP is mainly due to our 9% lower aggregate 2023-2027F NPAT-MI, which is partially offset by rolling our TP horizon forward to mid-2024.

- We cut our forecasts for VNM’s 2023/24/25F NPAT-MI by 7.0%/8.1%/9.5%, respectively, mainly due to our expectation for 60/160/200-bp increases in SG&A/sales as we expect VNM to ramp up advertising & marketing spending to regain market share amid fierce competition — especially in liquid milk and powdered milk. A 40-bp cut in our projected GPM also contributes to our lower 2023 NPAT-MI forecast; however, we raise our GPM in 2024/25F by 30/20 bps, respectively.