VNM - OUTPERFORM - Short-term margin pressure - Update

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FY13 sales growth fell to 16.5% (volume growth 10% yoy) on the back of weaker purchasing power dragged from 2012 lacklustre economic growth and high inflation. Meanwhile, gross margins declined in the last quarter due to higher raw material costs (namely powdered milk) which we believe is short term. What is more important in the long term in our view is rising advertising expenses which eroded net margins due to competitive pressures, especially from multinationals in Vietnam.
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