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CNG - BUY - High yield, compressed margins - Initiation

We initiate coverage on CNG Vietnam with an BUY rating based on the stock’s high dividend yield of 16%. CNG will pay a cash dividend of VND3,500 for 2012, which our analysis shows is sustainable at least through 2015. Although its business is solid and demand will grow for compressed natural gas, its sole gas supplier is raising input prices. This means that its GPM will be under pressure until 2016, when we expect it to bottom at 11%.