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NLG [M-PF +8.3%] - Solid growth likely in 2017, but challenges on the horizon - Update

We downgrade NLG’s rating from O-PF to M-PF with total return of +8.3%. We raise our TP 15% on higher-than-expected 2016 sales contract value, but the shares have rallied 20% YTD. New launches on the west side of Ho Chi Minh City will drive contract sales value up 53% in 2017. Strong pre-sales and a 50% stake transfer of the Nguyen Son project fuel 38% 2017F EPS growth. With increasing competitive headwinds, NLG is fairly valued with 2017F P/B at 1.3x.