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HSG [MARKET PERFORM -3.8%] - Weak earnings, financial position cast shadow on outlook - Update

We maintain our MARKET PERFORM rating for HSG but cut our target price to VND9,200. Disappointing Q2 2018 results, with a significant divergence between revenue growth (+30% vs Q2 FY2017) and NPAT-MI growth (-51% vs Q2 2017), were due to a shrinking gross margin, partly due to higher HRC input prices, as well as a surge in SG&A and interest expenses.