VTP [OUTPERFORM 10.2%] - Product shortages, rising costs squeeze margins

- We reiterate OUTPERFORM for VTP as its near-term earnings are under pressure from a lingering supply shortage of online products and high fuel costs that have dampened its profit margins. Nonetheless, we remain optimistic on VTP’s capability to benefit from Vietnam’s rapid e-commerce growth thanks to its wide postal network, investments in technology and strategic fixed assets.

- We cut our TP by 11.3% due to (1) our WACC increasing from 10.7% to 11.1% in 2022F-2026F as a result of our 50-bp higher risk-free rate assumption and (2) a 4.6% decline in aggregate 2022F-2024F EBITDA due to an 11.2% cut in aggregate 2022-2024F service segment gross profit, which is partially offset by an 88% increase in aggregate 2022-2024F trading gross profit.

- For 2022F, we project sales revenue to increase 7.8% YoY to VND23tn (USD1bn) with NPAT-MI climbing to VND339bn (USD15mn; +14.7% YoY), which is mainly driven by the normalization of activities following COVID-19 restrictions in 2021 and the subsequent rebound of the economy.