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LHG [BUY +65.6%] - Attractive valuation, strong net cash balance sheet - Update

- We maintain our BUY rating for LHG but cut our target price by 49% to VND32,900/share.

- Our target price cut is mainly due to (1) increasing our valuation discount to 40% vs previously 20% to reflect increased risks resulting from the current trading restrictions on LHG’s shares, (2) removing all of LHG’s future projects (including Long Hau 3.2 and An Dinh) from our valuation, and (3) increasing our WACC by 4.3 ppts. Our downward revision is partially offset by the positive effect from rolling our target price horizon forward to end-2023.

- We raise our 2022F NPAT-MI forecast by 7% following our higher assumed GPM forecast thanks to higher-than-expected GPM in 9M 2022. Meanwhile, we cut our 2023F NPAT-MI forecast by 3.9% due to lower IP land sales forecasts in the year. We also lower our 2024-2026F aggregate NPAT-MI forecast by 22%, which is mainly due to removing LHG’s future projects from our forecasts and valuation.

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