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DRC [UNDERPERFORM -19.1%] - Euro 4, diminishing competitiveness drag on earnings - Update

We downgrade DRC to UNDERPERFROM from MARKET PERFORM with a target price of VND18,000, implying a total stock return of -19.1%. Our target price cut reflects: (1) a lower volume growth forecast as DRC’s competitive position continues to deteriorate following an increase in its selling prices and (2) our expectation that the radial tires segment will remain loss-making rather than break-even in 2018.