HHV_Flash note

DEO CA TRAFFIC INFRASTRUCTURE INVESTMENT JSC (HHV VN)

HHV’s 2Q2026 and 1H2026 results were broadly in line with our expectations. We maintain our FY2026 forecasts and Buy recommendation, while lowering our target price by 5% to VND15,700/share to reflect the dividend adjustment.

Looking ahead to 2026–2027, we expect the BOT segment to sustain 8–10% annual earnings growth, supported by rising traffic volumes and providing a stable source of operating cash flow. Meanwhile, the construction segment is well positioned to benefit from Vietnam’s accelerating public investment cycle, with a backlog exceeding VND3.5tn as of end-Q2/2026 (equivalent to 2.7x FY2025 construction revenue), providing solid earnings visibility over the next few years. Nevertheless, the pace of backlog conversion will depend on project execution and disbursement progress, while construction margins could face pressure if raw material cost inflation outpaces contractual price adjustment mechanisms.

HHV delivered solid 2Q2026 results, with revenue reaching VND970 bn (+2.5% YoY) and NPAT of VND145 bn (+11.5% YoY). Earnings growth was primarily driven by the BOT segment, which accounted for 66% of total revenue and generated VND1.24tn in revenue (+16% YoY), supported by higher traffic volumes across key assets, including the Bac Giang–Lang Son Expressway and the Deo Ca, An Dan, and Bac Hai Van toll stations.

In 1H2026, HHV reported revenue of VND1,877 bn (+11.6% YoY) and NPAT of VND325 bn (+17.3% YoY), achieving 51% of both management’s FY2026 guidance and our full-year forecast. The strong performance was mainly attributable to continued growth in the BOT business.

Gross margin improved to 45.4% in Q2/2026 (vs. 40.9% in Q2/2025), driven by a 3.3ppt expansion in the BOT gross margin to 68.4%, reflecting higher traffic volumes and toll rates, as well as a 2.1ppt increase in the construction gross margin to 6.6%, supported by a more favorable project mix.

During 1H2026, HHV secured nearly VND2.0tn of new construction contracts, including the Nui Vung Tunnel Expansion, Quang Ngai–Hoai Nhon Expressway, and HCMC–Trung Luong–My Thuan Expressway expansion projects. In addition, a consortium led by HHV was awarded the operation and maintenance contracts for two sections of the North–South Expressway (Eastern Corridor), strengthening earnings visibility for its construction and infrastructure services businesses over 2026–2027.