We reiterate our BUY rating for VRE with a target price of VND40,000/share. Our 7% higher target price compared to our last Update Report is mainly due to our higher 2023F gross margin for the retail leasing segment, higher revenue recognition and gross margin for the property sales segment in 2023F, and our higher projections for new mall launches in 2024-2027F.

We raise our 2023F NPAT-MI forecast by 17% to VND3.8tn (USD161.6mn; +39% YoY) mostly due to a higher contribution from the property segment. The strong YoY growth in 2023F NPAT-MI is driven by (1) the ongoing recovery of tenant businesses, (2) no COVID-19 support packages, (3) full-year contributions from new malls opened in H1 2022 — including VMM Smart City — and (4) the property sales segment finishing higher YoY.

VRE’s valuation looks attractive at a 2023F P/E of 16.9x (based on our forecast) vs the regional peer median consensus 2023F P/E of 25.5x, in addition to our projected 2022-2027F NPAT-MI CAGR of 22% for VRE that is a result of our expectation for additional contributions from new malls and an overall margin improvement.