Water Sector Update - Targeting further M&A transactions in H2 2023

Volume growth to be weak in the short term, but long-term growth outlook intact. We lower our 2023 volume growth forecasts for BWE and TDM to 5% and 8%, respectively, following weaker-than-expected Q1 2023 results and the recent cut in our 2023F GDP growth forecast from 6.5% to 6.0%. Nevertheless, we maintain our optimistic long-term outlook. Binh Duong authorities have set a GRDP target of ~10% p.a. in 2021-2030, an industrial park master plan and key infrastructure projects such as Ring Road No. 3. We forecast BWE’s volume growth to recover to 15%/18% in 2024/2025 — equivalent to the pre-COVID level. We are also confident in projecting TDM’s volume growth at 15%/18% in 2024/2025 vs its pre-COVID level of 20%-30%.

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