DRC [OUTPERFORM +16.4%] - Sales growth and profitability to improve in H2 2022 - Update

- We raise our target price (TP) for DRC by 1.5% to VND33,400/share and maintain our OUTPERFORM rating as the company has shown strong sales growth as a result of its effective capacity expansion. 

- Our higher TP is mainly driven by raising our aggregate 2022-2024F NPAT-MI forecast by 11.4%, which is partially offset by a higher WACC (12.6% vs previously 12.2%) resulting from our 50-bp higher risk-free rate assumption.

- We raise our 2022F NPAT-MI by 8.4% to VND374bn (USD16mn; +28.6% YoY), which is primarily due to (1) increasing our radial tire sales volume growth assumption for 2022F to 22% YoY vs previously 10% YoY and (2) a higher ASP increase for domestic radial tires in 2022F (10% vs previously 8.7%).

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