TLG_BUY_TP 75,600_Upside 20.0_WHAT ARE THE OPPORTUNITIES FOR 2023_BSC_Vietnam company update

VALUATION

We recommend BUY for TLG share with a target price of 75,600 VND/SHARE upside 20% compared to the price on 5/9/2022 with DCF method and P/E with a weighting of 50%/50% respectively.

FORECASTING BUSINESS RESULASSET

BSC expecasset  TLG's net revenue and NPAT in 2022 to reach VND 3,725 billion (+40%YoY) and VND 527 billion (+97%YoY), EPS FW = VND 5,290, P/E FW = 12 times thanks to low background growth and lower materials price trend over the same period.

In 2023, net revenue and NPAT will reach VND 4,514 billion (+21%YoY) and VND 625 billion (+19%YoY), equivalent to EPS in 2023 = VND 6,293 and P/E FW = 10 years – 12.4 times lower than the 5-year average PE.

INVESTMENT THESIS

• Gross profit margin improved from 2H/2022 around 44%-45% thanks to (1) an increase in selling prices from 1H/2022~5%YoY and a roadmap to increase selling prices according to the strategy (2) raw material prices tend to decrease (3) restructuring the distribution system.
• Long-term growth comes from (1) the expectation that Thien Long Thanh factory will be put into operation by the end of 2022; (2) premiumization of existing SP series (3) growth potential comes from new OEM and new producasset  – based on the advantage of proactively sourcing bioplastic materials.
• Healthy financial structure, stable dividend yield from ~5%/year.

Catalyst

• Strategic investors and shareholders increase ownership rates
• The potential comes from investingwith large enterprises to expand B2B channels

RISK

•     Input NVL price movemenasset .