- We raise our target price (TP) for VTP by 3.6% to VND34,600/share but downgrade our rating to MARKET PERFORM from OUTPERFORM as the company’s share price has rallied 28% over the last two months and has increased 43% YTD.      

- Our increased TP is mainly driven by our 0.1% higher aggregate 2023-25F NPAT-MI forecast (respective changes of 1.2%/-0.8%/0.2% for 2023/24/25F), which is contributed by our 14% higher aggregate 2023F-25F service gross profit on the expected decrease in fuel costs that outweigh our 29% higher SG&A expense projection from higher-than-expected labor costs.

- For 2023F, we project sales revenue of VND18.6tn (USD791mn; -14% YoY) and NPAT-MI of VND370bn (USD16mn; +44% YoY). We expect revenue will be dragged by a 37% YoY decrease in trading revenue while earnings recover from a low base and are bolstered by a higher gross margin from the service segment.

- Downside risks: Prolonged price war in the express delivery industry; ineffective investments in new businesses; significant negative impact from economic slowdown weighing on consumption.

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