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

- Our lower TP is mainly driven by our 9% lower aggregate NPAT-MI forecast in 2024F-25F as we lower our forecasts for consolidated domestic GPM in 2024F/25F by 150/210 bps to 43.1%/43.0% (vs. 43.1% in 2021). This is partly offset by rolling over our TP to end-2024.

- We hold VNM's superior profitability and solid dividend payment in high regard. We also keep our forecasted 2023F-26F sales CAGR of 6% for VNM, driven by the rising disposable income of Vietnamese as the labor market recovers. However, we reduce forecasted 2023F-26F EPS CAGR to 8% (from 10% previously) due to (1) slower-than-expected GPM progress in 9M 2023 and (2) unfavorable changes in VNM’s parent domestic product mix that make us less optimistic about parent domestic GPMs in 2024F-25F approaching the pre-COVID levels.

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