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VNM [O-PF +16.6%] - Solidifying its dominant position, but margins could soften - Update

Company Research

15 Nov 2016

We reiterate our OUTPERFORM rating for VNM despite lowering our FY17 earnings forecast. Market share gain continues to fuel 20% domestic volume growth in FY16F and 12% in FY17F. Selling expense growth starts to peter out as we project it to grow in line with revenue in FY17F. The recovery in input milk powder prices will pressure FY17 margins. We project GPM margin to shrink from 42.7% in FY16 to 40.5% in FY17 despite a projected 3% ASP hike. TTM PER of 23.5x is fairly in line with reg
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