DRC - HOLD - Bouncing at our target price - Results
We upgrade DRC from REDUCE to HOLD as its share price has fallen to our target price of VND24,300. We have increased our gross margin forecast for its current factory on lower-than-expected rubber prices, but this appears to be priced into the stock as it did not react to good 2Q12 and 3Q12 results. Regional peers showed a similar trend as PERs are falling across the region. Investors should wait for the next catalyst, which is earnings visibility from its new radial tyre project.