AST [OUTPERFORM +14.9%] - Stronger recovery to start in Q4 2022 - Update

- We raise our target price (TP) for AST by 5.2% to VND68,600/share but maintain our OUTPERFORM rating. 

- Our higher TP is mainly driven by our 16% higher aggregate 2022-2024F NPAT-MI forecast. Moreover, we increase our valuation for AST’s 27%-owned associate VINACS as we expect a stronger recovery in its top line on the back of our expected recovery of international aviation activities in 2023. These two positive factors are partially offset by increasing our in-house WACC assumption due to a 50-bp increase in our risk-free rate assumption.

- In 2022F, we forecast AST’s revenue to jump 260% to VND555bn (USD24mn) as we assume average sales per store will recover to 40% of 2019’s level vs the low-single-digit result in 2021. Meanwhile, we project AST will achieve profit of VND10bn (USD430,000) — 21% lower than our previous projection — which is mainly due to our 30-bp cut in EBIT margin as the company’s profitability trailed our previous expectation in H1 2022.

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