- VNM released its Q4 2022 results, including revenue of VND15.1tn (USD639mn; -4.7% YoY) and NPAT-MI of VND1.9tn (USD79mn; -14.9% YoY). For 2022, VNM’s revenue was VND59.9tn (USD2.5bn; -1.6% YoY) and its NPAT-MI was VND8.5tn (USD361mn; -19.1% YoY), completing 99% and 93% of our respective full-year forecasts and behind our expectations in terms of gross margin. As such, we see potential downside risk to our 2023 earnings forecast for VNM, pending a fuller review.

- According to NielsenIQ, the value growth of milk-based products in Vietnam was 5% YoY while volume remained flat in 11M 2022. We believe consumer spending on milk-based products was weak throughout 2022. Additionally, domestic gross margin remained under siege in Q4 2022, which was under our expectations as we expected to see gross margin improvement starting in Q4 2022 as commodity prices slumped — especially milk powder.

- 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 2% YoY in 2022. We believe the negative growth was cushioned by higher selling prices in 2022 as VNM conducted two price hikes (one in March 2022 and another in May 2022) with the cumulative average price increase amounting to approximately 5.0-5.5% YoY in 2022, per our estimates.

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