VNM Update- BUY

The company announced a surge of 24.6% YoY in net revenue and 54.9% YoY in EAT in 1Q2026 on the low base in the same period last year. Overseas revenue was in the limelight for sustaining an encouraging momentum, despite potential deceleration in coming quarters given disruption in international transport routes. We maintain our EAT projection of VND9,783bn (+3.9% YoY) and target price at VND72,000/share by YE2026, translating to a total return of 25.5%. Rating BUY.

Net revenue and EAT rose by 24.6% YoY and 54.9% YoY, to VND16,149bn (+24.6% YoY) and VND2,458bn (+54.9% YoY), respectively, in 1Q2026, in line with our expectations. Sales of finished goods – capturing 93% of the total – soared by 23.3%.

Overseas revenue continued to be a highlight in view of a jump of 39.1% YoY to VND4,069bn, enabling it to account for 27% of VNM’s 1Q2026 sales of finished goods (25% of total net revenue). The results were fueled by good performance in direct exports activities (+15-16% YoY) to the conventional market Middle East and other markets, alongside overseas subsidiaries (e.g. Angkor Milk’s top line soared by three-fold on strong demand in Cambodia). Exports to the Middle East did not encounter many obstacles in 1Q, as the majority of delivery was finished in the first two months when tension in the region has yet escalated.

Domestic revenue of finished goods grew by 18.4% YoY to VND10,936bn, largely driven by the low base in the same period last year when the company had restructured its traditional distribution channel.

The 54.9% YoY upturn in EAT in 1Q was propelled by an improved SG&A expenses to net revenue ratio (-1.9% ppt) as a result of faster sales growth, coupled with a strengthened gross margin (+1.6 ppt).

We maintain our projections of VND66,334bn (+4.2%YoY) in net revenue and VND9,783bn (+3.9% YoY) in EAT for 2026. In the following quarters of 2026, the base effect in domestic revenue is not projected to extend, while the company holds a cautious view about exports outlook to the Middle East considering disruption in transport routes through the Strait of Hormuz. The management hopes the disruption will end soon and has strived to establish alternative shipping routes through Jordan in order to sustain the brand’s long‑term presence, prevent supply disruption, and strengthen long‑term partnerships with international partners; however, increased freight rates and longer delivery time may slow down exports growth in the following quarters.