Vitamilk Investor Report - Afsdf23

VIETNAM DAIRY PRODUCTS JSC
INVESTOR PRESENTATION
APRIL 2022
Important Notice
Certain statements in this Presentation constitute “forward-looking statements”, including forward-looking financial information.
Such forward-looking statements and financial information involve known and unknown risks, uncertainties and other factors which
may cause the actual results, performance or achievements of Vietnam Dairy Products JSC (“VNM”), or industry results, to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking statements
and financial information. Such forward-looking statements and financial information are based on numerous assumptions
regarding VNM’s present and future business strategies and the environment in which VNM will operate in the future. Because
these statements and financial information reflect VNM’s current views concerning future events, these statements and financial
information necessarily involve risks, uncertainties and assumptions. Actual future performance could differ materially from these
forward-looking statements and financial information.
VNM expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking
statement or financial information contained in this Presentation to reflect any change in VNM’s expectations with regard thereto or
any change in events, conditions or circumstances on which any such statement or information is based, subject to compliance with
all applicable laws and regulations and/or the rules of the Ho Chi Minh City Stock Exchange and/or any other regulatory or
supervisory body or agency.
This Presentation includes market and industry data and forecast that have been obtained from internal survey, reports and studies,
where appropriate, as well as market research, publicly available information and industry publications. Industry publications,
surveys and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but
there can be no assurance as to the accuracy or completeness of such included information. While VNM has taken reasonable steps
to ensure that the information is extracted accurately and in its proper context, VNM has not independently verified any of the data
from third party sources or ascertained the underlying economic assumptions relied upon therein.
All content © Vietnam Dairy Products JSC 2

Key Highlights
Favorable Macro Situation in Vietnam
Diversified Portfolio Leadership
Unique End-to-end Value Chain
Agile Leadership
Strong Financial Position

How We Get Here
North
Ha Noi 1 Factory
2 Dairy Farm
2022
1976
VINAMILK Today Central
100% State owned 4 Factories
enterprise • Largest listed F&B on HOSE ($8.5B market cap) 8 Dairy Farms
• Established as Southern Coffee Dairy • Most valuable brand by Forbes Vietnam ($2.4B)
Company with 3 dairy factories. • No.1 dairy production facilities (15 dairy South USA
factories) 8 Factories 1 Factories
4 Dairy Farms
2003-2006 • No.1 dairy cow network (sourcing from 160K+
cows including Mocchau Milk) Cambodia
Go Capitalized 1 Factories
• Nationwide distribution network plus 4 Headquarter
• IPO and renamed to Vietnam Dairy
overseas subsidiaries Ho Chi Minh City Healthcare Clinic
Products Joint Stock Company in 2003.
• Ranked 36th global dairy producers by
• Listed on Ho Chi Minh Stock Exchange
revenue
(HOSE) in 2006.
Corporate Structure
VINAMILK
Domestic Subsidiaries & Overseas Subsidiaries &

Production & Logistics
Associates Associates
Vietnam Dairy Cow One Member

13 factories in the North, Co., Ltd. (100%)* Driftwood Dairy Holdings Corporation
Central, and South (USA, 100%)
Thong Nhat Thanh Hoa Dairy Cow
One Member Co., Ltd. (100%) Angkor Dairy Products Co., Ltd.
03 sales offices in Ha Noi, (Cambodia, 100%)
Da Nang, and Can Tho
GTNFoods JSC (75%)
Del Monte – Vinamilk (Philippines,
02 logistics enterprises in 50%)
Ha Noi & Ho Chi Minh City Vietnam Sugar Joint Stock
Company (65%)
Miraka Limited (New Zealand, 23%)
Cu Chi Raw Milk Center Vibev F&B JV Co. Ltd. (51%)
APIS Joint Stock Company (20%) Lao Jagro Development Xiengkhouang

Co., Ltd (Laos, 85%)
An Khang clinic
Asia Coconut Processing Joint
Stock Company (25%)
* Percentage of Vinamilk’s ownership
Ownership
• No foreign ownership limit (FOL) since July 2016
• Largest free float ($3B) for foreign investors
• 3 major shareholders: The State Capital Investment Corporation (SCIC), F&N Group (ThaiBev)
Jardine C&C (Victory Platinum)
Others
(free
SCIC,
float),
36.00%
33.37%
F&N
Jardine Group,
(Victory 20.01%
Platinum)
, 10.62%

New “Green Farm” in Quang Ngai
This dairy farm of over 100 hectares has
the capacity of 4,000 heads, with the initial
investment capital of up to VND 700
billion. It is a part of the eco-friendly farms
network “Green Farm” that Vinamilk has
All content © Vietnam Dairy Products JSC been investing in and developing7 since the
All content © Vietnam Dairy Products JSC beginning of 2021.
Investment highlights
Favorable Macro Domestic End-to-End Solid Proven Record of

Situation Champion with Value Chain Leadership Financial Results
Diversified
Portfolio

Favorable Macro Trend in Vietnam
• Vietnam is forecasted to be one of the fastest • The second highest Final consumption
growing economies in the world. expenditure per GDP in Southeast Asian in 2019.
7.0 6.7 7.0 86%
2.9 75%
72%
67% 66%
2019 2020 2021F 2022F
46%
Philippines Vietnam Malaysia Indonesia Thailand Singapore

Indonesia Malaysia Philippines
Singapore Thailand Viet Nam
Source: Asia Development Bank Source: World Bank

Strong Dairy Demand In Vietnam
Vietnam dairy consumption per capita (CPC) in 2019 was 21.8kg – a 18% lower than regional
average – implying sizable room for future growth.
42.9
33.5
Kg per capital
25.7 26.7
21.8 22.3
9.0
Malaysia Vietnam Thailand Indonesia South Korea China

CPC of each comparable Avg. CPC of comparables
Source: Euromonitor data

Investment highlights

Diversified
Portfolio

Leverage the 44-Year Brand Heritage
250 SKUs
Since 1976 Well-perceived and
Trusted Brands All Segments From Pre-
Consistently Deliver
High Quality And Value
natal To The Elderly
UNRIVALLED LEADER IN THE DAIRY CATEGORY IN VIETNAM
Liquid Milk Yoghurt Condensed Milk Formula Milk
Fruit Juice &

Baby Cereal Plant-based Cheese Milk Smoothie Ice Cream Power Drink

Balance Heritage with Innovation
Refresh the portfolio annually with 15-20 new products

Pioneer The National School Milk Program
• Rollout year: 2016 under Degree 1340/QĐ-TTg by Vietnam’s Deputy Prime Minister
• Purpose: Improve the nutritional intakes and physique of Vietnamese children; Increase dairy
penetration among young generations
• Reference stories: Korea (1953), Japan (1959), Thailand (1985)
• Full scale: 300 million milk bottles (180ml) per month
• Achievement: ~30 cities and provinces already signed contracts with Vinamilk via competitive
bidding

Investment Highlights

Diversified
Portfolio

VINAMILK’s End-to-End Value Chain MANUFACTURING AND 01
PROCESSIG DriftWood Factory -
FARMING AND MILK PROCESSING 14
Farms
USA
BEVERAGES AND
DAIRY PRODUCTS 01
AnkorMilk -
01
Raw Milk Centre – Cu Chi
Cambodia
13
Factories
01
Vinamilk Lao- 83
Raw Milk Collection Stations
Jagro Dairy
Farm Complex 01 DISTRIBUTION
Moc Chau
01
Raw Material Production and Factory
Supply Factory (Sugar)
TRADING 03
Sales
Branches
~200
Distributors
02
HEALTH CARE, 240.000
Points of Sales
Logistics
NUTRITION Enterprises
Conventional channels
600+
“Giac Mo Sua Viet” Stores
01
Polyclinic
2.400
Points of Sales – Convenience Stores
01 Export to 5
Nutrition Continents
Center 55 5.400
Points of Sales – Supermarkets
Countries and Territories
08
E-Commerce Partners
Vinamilk E-shop giacmosuaviet.com

Domestic operation
Online Shopping app – “Giac Mo Sua Viet” International Operation

From The Long-Term Relationship With Suppliers
LOCAL RAW MILK FRESH-MILK PRODUCTS
14 34K+
Own farms Cows
6K+ 126K+
Contracted cows
farmers
IMPORTED MILK POWDER RECONSTITUTED & POWDER PRODUCTS
Whole Milk Skim Milk Anhydrous Milk

Powder Powder Fat

Xiengkhouang Dairy Farm (Laos)
In May-19, Vinamilk inaugurated a
new organic dairy farm complex in
Laos:
• 5,000 hectare land bank offering

significant potential for future
expansion
• Highland area, suitable soil &
weather for organic farm
• Approved projects for Phase 1: 24,000
cows
• Estimated time of milking: 2023

Continued Progress Towards ESG
WATER COW WELFARE

Environmental management system Digitalize disease history and cow
according to ISO 14001 milk yield data
5.15% of water used in production was Improving the method of breeding
circulated and reused cows to not affect cows’ psychology
FARMERS
Policy on reasonable purchase price
Advice on improvement of farming techniques
Improvement of cohesion and service quality
WASTE
SOIL & BIODIVERSITY Biogas system applied at all
Crop Rotation Vinamilk’s farms to reuse and reduce
Use of organic fertilizers for soil in waste and greenhouse gas emissions,
replacement of chemicals and inorganic while using organic fertilizers as
fertilizers, minimizing waste to the renewable energy for water heating
environment All content © Vietnam Dairy Products JSC system 19
Strengthen The Chain through M&A
68% 59.3%
8.9%
MCM’s Positive Sales MCM’s Improved NPAT MCM’s Corporate

Growth Governance and Business
Operation
VND 2,823
bn
VND 281 bn
• Listed on UpCom in 12/2020.
• Integrated ERP in operation business.
• The size of Moc Chau Milk’s herd
VND 2,562
bn
reached an average growth rate of
14% per year and the average
VND 167 bn yield was 25 liters/head/day.
2019 2020 2019 2020

MCM’S New Resort Farm Project
4,000 cow heads
270 hectare
USD 2 mn

To The State-of-The-Art Technologies
• Automation (feeding, • Raw milk delivered by • Production lines using
scratching, cooling, chill tankers at 2-6ºC German, Italian, and Swiss
milking etc.) using Israeli technologies
technologies • Spray drying technology by
• Implanted sensors on Niro that retains high content
each cow to monitor yield of nutrients and mineral
and animal wealthfare
• Packaging technologies
• Sales & accounting system
by Tetrapak, Bencopack,
are fully integrated
and SIG Combibloc
• Inventory and spoilage loss

are controlled by Oracle ERP
• Automated shipment from
smart warehouse by LGV
robots

Completely Automated Factory in Binh Duong Province.
Our Largest Factory (Binh Duong, Vietnam)
100% AUTOMATED PRODUCTION

Capacity: 800 One of the Largest Production of
million liter p.a TETRA PAK UHT Milk, Soya
Factories Globally Milk and Beverages

Vinamilk Cow “Resort” Tay Ninh
The first facility to be fully governed by 4.0
automated technology, augurated from 2019. The
complex expanding over 685 hectares houses nearly
All content © Vietnam Dairy Products JSC 8,000 cows, with initial investment reaching
25 VND
All content © Vietnam Dairy Products JSC 1,200 billion.
Improved Milking Production over years
194,874 185,979 187,800 193,690 187,410 27.23 27.45
25.61 26.22
24.4
13.17 13.63 13.43

12.25 12.48
148,831
124,255
102,384
73,334
51,790
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Amount of milk purchased from local dairy farmers (tons) Average milk yield of dairy farmers (kg/head/day)
Total amount of raw milk production (tons) Vinamilk's Average milk yield (kg/head/day)

Be the Leading Distributor in Vietnam and
Expanding Across the Boundaries
• Extensive coverage on the back of nationwide POS network
• Dominant across traditional and modern channels
VINAMILK
Key Accounts
200+ Exclusive Supermarkets 600+ VNM 50+ Export
(Horeca,
Distributors & CVS Stores Markets
schools, etc.)
240K+
Retailers
CONSUMERS/END-USERS

New joint ventures
Vinamilk-Del Monte joint venture
– 50% owned by Vinamilk
officially launched products in
Oct-21 with $9M sales target in
the 1st year and 10% market
share ambition in mid-long run.
The first four products include
Del Monte-Vinamilk fresh milk,
IQ Smart™ nutritious milk,
YoGurt UHT drinking yogurt and
Bliss milk tea.

New joint ventures
Vibev joint venture - 51% owned by Vinamilk, introduced two fresh drinks products to Vietnamese consumers in mid-November 2021 including
green bean milk and corn milk under Oh Fresh brand.
Oh Fresh products have been officially exhibiting within the nationwide distribution systems of Vinamilk and KIDO including: supermarkets,
minimarts, grocery stores, restaurants and e-commerce sites.

New joint ventures
51% 49%
JOINT
VENTURE
Available Resources in Vietnam:

• Long track record in Vietnam market.
• A massive industrial infrastructure with
270-ha area.
USD 500 mn • The compound feed production and
Total capital committed sales business overseas.
• A food value chain: MINISTOP
Convenience Stores, Japan Best Food.
• Modern cold chain logistics services.


Diversified
Portfolio

Experienced Leadership Team with Deep
Industry Expertise
Mdm. Mai Kieu Lien
CEO & Board Member
• Bachelor/Engineer in Meat and Milk Processing
• Certificate of Leningrad Economic Management
• Certificate of Government Management
45
Mr. Mai Hoai Anh Mr. Trinh Quoc Dung Mr. Le Thanh Liem
Executive Director – International Executive Director - Dairy Board Member, CFO anh Chief
and Domestic Sales Development Accountant
• BA in Economics • Engineer of Energy and • BA in Economics, major in
• MBA Automation Enterprise Financial Accounting
25 16 27
• MBA of International Commerce
and Finance
Ms. Bui Thi Huong Mr. Nguyen Quoc Khanh Mr. Le Hoang Minh
Executive Director - Human Executive Director – R&D Executive Director - Production
Resources Administration & PR • BA in Chemical Technique and • BA in Electrical Engineering
• BA in Russian language Foods
• BA in Economics • BA in Business Administration
33 • BA in English 20
16
Mr. Nguyen Quang Tri

Executive Director – Marketing
• Dr, DBA
• MBA
Years of Experience with Vinamilk All content © Vietnam Dairy Products JSC 32

Diversified
Portfolio

Best-in-class financials (2021 figures)
Net revenue Gross profit margin ROE
(VND bn) (%) (%)
60,919 43.1 30.6

Net profit after tax Earnings per share ROA
(VND bn) (VND) (%)
10,633 4,517 20.9

Robust Growth & Strong Balance Sheet
Solid CAGR in the past 10 years… ...on top of a healthy Balance Sheet
59.7 61.0
56.4
51.1 52.6
47.0
40.2
VND trillion
VND trillion
35.2 53.3
31.6
27.1 44.7 48.4
34.7 37.4
15.9 15.1 27.5 29.4
13.6 13.7 14.9
10.5 12.5 22.9 25.8
7.5 8.8 8.7 19.7
31% 30% 33% 31% 33%
21% 23% 23% 24% 24%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total revenue EBITDA Total debt/Total assets Total assets

THANK YOU
IR contact
Trung Dong (Mr.)
Investor Relations Manager
E dqtrung@vinamilk.com.vn
T +84 028 54 155 555 / Ext 108247 All content © Vietnam Dairy Products JSC 36
VNDIRECT RESEARCH
VIETNAM DAIRY PRODUCTS JSC (VNM) ─ UPDATE

Market Price Target Price Dividend Yield Rating Sector
VND80,600 VND110,000 4.41% Add CONSUMER GOODS
18 February 2022
A glimpse of hope for a better 2022
Outlook – Short term: Positive ▪ VNM’s FY21 revenue increased 2.2% yoy, while its net profit plunged 5.1%
Outlook – Long term: Positive yoy as increasing raw milk price dented gross profit margin.
Valuation: Positive ▪ We forecast VNM’s NP to grow 3.5%/7.3% yoy in FY22-23F.
▪ Reiterate ADD but lower TP to VND110,000, following a 8.7%/11.5%
Consensus*: Add:13 Hold:2 Reduce:0 downward revision of FY22/23F EPS.
Target price / Consensus: 1.8%
Gross profit margin narrowed by raw milk price surge
In 4Q21, domestic revenue grew 7.4% yoy on 2% yoy increase in average selling
Key changes in the report
price (ASP) and 5.4% yoy sale volume growth, per our estimates. Overseas
➢ Lower FY22F/23F EPS by 8.7%/11.5%
market revenue grew impressively 21.6% yoy on the back of 1) export revenue
grew 23.2% yoy mainly thanks to the Middle East market, and 2) overseas
subsidiaries’ revenue rose 29.8% yoy on the back of Angkor Milk’s efficient
Price performance distribution operation. However, 4Q21 gross margin narrowed down significantly
by 3.6% pts yoy due to increasing whole milk powder prices. 4Q21 selling
111,000
Price Close Relative To VNIndex (RHS)
110.0
expenses dropped 5.0% yoy as VNM control expenses to preserve its net profit
106,000 100.0 margin, thus NP increased 0.5% yoy in 4Q21, higher than that of decreasing 4.9%
101,000 90.0 seen in 3Q21. Overall, FY21 net revenue increased 2.2% yoy, while its net profit
96,000
91,000
80.0
70.0
plunged 5.1% yoy fulfilling 92.9% of our forecast.
86,000 60.0
We revise downward FY22-23F forecasts by 8.7%/11.5%
81,000 50.0
76,000
15
40.0
We lower our FY22-23F domestic revenue forecast by 3.1%/3.1% to reflect a
10
slower-than-expected consumer demand recovery. Besides, we cut GPM
Vol m
02-21 04-21 06-21 08-21 10-21 12-21

FY21/22F forecast by 1.5%/2.0% pts to reflect 15.0%/20.0% increase in milk
Source: VND RESEARCH
powder price assumption and 2%/1% yoy in sugar price due to the anti-dumping
Key statistics tax. Thus, we expect VNM’s revenue and NP to grow 6.3%/6.5% yoy and
52w high (VND) 110,000
3.6%/7.6% yoy in FY22-23F, respectively, lower than our previous forecast.
52w low (VND) 79,200 Is VNM still attractive after a year of moving sideways?
3m Avg daily value (VNDmn) 162,049 In our view, the stock price will keep bearing with high milk powder price pressure
Market cap (VND bn) 168,868 in short term. However, we believe VNM is suitable for the long term thanks to 1)
Free float (%) 33 stable business performance, 2) healthy balance sheet and 3) stable dividend
yield. Besides, we expect milk demand to increase by 6% yoy in 2022F.
TTM P/E (x) 16.0
Therefore, we expect VNM with leading position in the dairy industry will ride on
Current P/B (x) 4.77 the recovery of consumer demand after the pandemic. Thus, we reiterate Add
rating.
Ownership Reiterate ADD with lower TP of VND110,000
SCIC 36.0% Our TP is derived from an equal weighting of the 10-year DCF model with
F&N Dairy Investment Pte, Ltd 20.0% 8.7%/11.5% decrease in FY22-23F EPS and target P/E of 21.8x applied on
Platinum Victory Pte Ltd 10.6% FY22F EPS. Re-rating catalysts is stronger-than-expected growth of domestic
dairy consumption. Downside risks include 1) longer-than-expected Covid-19
Others 33.4%
pandemic and 2) higher–than-expected whole milk powder prices.
Financial summary (VND) 12-20A 12-21A 12-22E 12-23E
Net revenue (bn) 59,636 60,919 64,738 68,944
Analyst(s):
Revenue growth 5.9% 2.2% 6.3% 6.5%
Gross margin 46.4% 43.1% 43.8% 44.4%
EBITDA margin 26.6% 24.8% 24.2% 24.4%
Net profit (bn) 11,099 10,532 10,905 11,737
Net profit growth 4.9% (5.1%) 3.5% 7.6%
Recurring profit growth
Basic EPS 5,311 5,040 5,218 5,617
Hien Ha Thu Adjusted EPS 4,770 4,546 4,696 5,055
BVPS 15,867 16,905 16,500 17,695
hien.hathu@vndirect.com.vn ROAE 35.6% 30.8% 31.2% 32.9%
www.vndirect.com.vn 1
VNDIRECT RESEARCH
A GLIMSP OF HOPE FOR A BETTER 2022

Investment thesis
We remain our positive view on VNM for FY22-23F thanks to the following
factors:
⚫ Its leading position in the dairy industry with total market share of 54% in
term value and 60% in term of volume.
⚫ VNM’s NP growth is forecast to reach CAGR of 7.5% in FY22-25F. We
believe this is stable growth for a company that has achieved a large profit
of VND10,000-11,000bn like VNM.
⚫ VNM has healthy balance sheet with superior ROE of 41.6%/31.4% during
FY18-FY22F period. The company maintains its leading position in the top
financial health businesses with impressive net margin of 17-18%, strong
cash balance with VND23,374bn in cash and short-term deposits.
⚫ The company also offers a solid dividend yield of 4-5% per year.
At the current price, VNM trades at 16.1x FY22F P/E, 24.9% lower than its two-
year historical average P/E despite its clear competitiveness, stable earnings
growth and healthy balance sheet. We believe VNM deserves to be further re-
rated to P/E of 21.8x to fully reflect the company’s strengths. Thus, we reiterate
ADD rating with lower target price of VND111,000 due to lower FY22-23F EPS
by 8.7%/11.5%. Our TP base on DCF (WACC 10.3%, COE 11.3%, and LTG
5.0) valuation and the target FY22F P/E of 21.8x, weighted equally.
Re-rating catalysts is stronger-than-expected growth of domestic dairy
consumption. Downside risks include 1) longer-than-expected Covid-19
pandemic and 2) higher–than-expected whole milk powder prices.
Figure 1: Discounted Cash Flows - Future Cash Flows to Firm (FCFF)
Present value of Free Cash Flows to Firm (VNDbn) 96,412
Present value of Terminal value (VNDbn) 135,652
Enterprise Value (VNDbn) 232,064
Less: Net Debt Plus: Cash + ST investment (VNDbn) 13,916
Equity Value (VNDbn) 245,980
No. of Outstanding Share (m) 2,090
Equity Value Per Share (VND) 117,711
WACC 10.2%
Cost of Equity 11.3%
Long-term growth 5.0%
Source: VNDIRECT RESEARCH
Figure 2: Multiples Valuation (P/E)
2022F NPAT attribute to common share holder (VNDbn) 9,814

2022F No. of outstanding share (m) 2,090
2022F EPS (VND) 4,696
Global milk producers' average P/E (x) 21.8
Discount rate for weak local market sentiment 0%
Target P/E 21.8
Implied price 2022 102,382
VNDIRECT RESEARCH
Figure 3: Valuation summary
Methodology Price Weight Weighted price

FCFF 117,711 50% 58,856
P/E 102,382 50% 51,191
Average price 110,047
Target price 2022 (Rounded) 110,000
Figure 4: DCF Valuation - Free Cashflow to Firm

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
EBIT 12,263 11,760 12,706 13,634 14,461 15,373 16,635 18,000 19,475 21,067 22,787 24,646 26,655
Add: Depreciation 2,209 2,121 1,766 1,858 1,963 2,071 2,199 2,328 2,473 2,667 2,886 3,127 3,389
Less: Capital expenditure (1,265) (1,531) (2,266) (2,413) (2,560) (2,370) (3,413) (2,303) (4,151) (4,483) (4,841) (5,229) (5,647)
Changes in Working Capital (2,624) (2,563) 332 (297) (1,192) (485) (524) (566) (611) (660) (713) (770) (832)
Free Cash Flow (FCF) 10,583 9,787 12,538 12,781 12,672 14,590 14,897 17,458 17,185 18,591 20,119 21,774 23,565
Less: Taxes Paid (2,283) (2,290) (2,404) (2,587) (2,747) (2,922) (3,163) (3,449) (3,735) (4,041) (4,372) (4,730) (5,116)
Free Cash Flows to Firm 8,300 7,498 10,135 10,194 9,925 11,667 11,735 14,009 13,450 14,549 15,746 17,044 18,449
Terminal Value 359,665
PV of FCFF 8,300 7,498 10,135 9,247 8,167 8,708 7,945 8,604 7,493 7,352 7,218 7,087 6,958
PV of Terminal Value 135,652
Figure 5: Peer comparison (data at 17 Feb 2022)

Share Target Market 3-year
Dairy Bloomberg price price cap EPS P/E (x) P/B (x) ROE (%) ROA (%)
producer code Recom. (local cur) (local curr) (US$m) CAGR (%) FY22F FY23F FY22F FY23F FY22F FY23F FY22F FY23F
China Mengniu Dairy Co Ltd 2319 HK NR 49.5 N/a 25,082 22.8 24.9 21.0 3.8 3.3 15.4 16.3 7.0 7.7
Bright Dairy & Food Co Ltd 600597 CH NR 13.3 N/a 2,893 7.9 21.6 19.4 2.2 2.0 10.5 10.6 3.8 4.2
Inner Mongolia Yili Industrial
600887 CH NR N/a 40,828
Group Co Ltd 40.4 6.5 23.5 20.1 5.8 5.1 26.6 27.2 12.8 13.6
MEIJI Holdings Co Ltd 2269 JP NR 6,840 N/a 9,073 2.4 16.0 15.0 1.4 1.3 9.5 9.1 6.3 6.5
Universal Robina Corp URC PM NR 127.5 N/a 5,453 0.3 22.9 20.9 2.6 2.4 12.2 12.3 8.0 8.4
Average 16,666 8.0 21.8 19.3 3.1 2.8 14.9 15.1 7.6 8.1
Vietnam Dairy Products VNM VN ADD 80,600 109,000 7,416 0.8 17.7 17.1 4.7 4.8 31.3 32.9 20.4 21.3
Source: VNDIRECT RESEARCH, BLOOMBERG
VNDIRECT RESEARCH
4Q21 recap: Gross margin hit by rising raw material costs
Figure 6: 4Q21 & FY21 results comparison

% vs our
2021
4Q21 4Q20 % yoy 2021 2020 % yoy 2021
forecast
VNDbn forecast Comment
Revenue 15,819 14,425 9.7% 60,919 59,636 2.2% 62,927 96.8%

Domestic revenue was nearly flat in FY21 due to weak
consumption demand affected by the pandemic. In which,
MCM contributed 5.7% to total revenue. According to
Domestic 13,020 12,122 7.4% 51,202 50,842 0.7% 53,045 96.5%
management, VNM's market share has increased by 1%
pts in terms of volume thanks to its advantage in
distribution chain compared to competitors.
Overseas 2,799 2,303 21.6% 9,717 8,794 10.5% 9,881 98.3%
Export revenue grew 10.2% yoy in FY21 mainly thanks to
the recovery in dairy products demand in the Middle East
Export 1,890 1,534 23.2% 6,128 5,561 10.2% 6,006 102.0% and Africa markets. In 2021, Vinamilk has developed two
new export markets (Singapore and Philippines),
increasing the total number of export markets to 57.
Revenue from overseas subsidiaries grew 11.0% yoy in
FY21 thanks to 1) revenue from Driftwood increased by
nearly 10% yoy thanks to the US school's reopening and
Subsidiaries 998 769 29.8% 3,589 3,234 11.0% 3,875 92.6%
2) double-digit growth of Angkor Milk thanks to its efficient
distribution operations as the largest dairy factory in
Cambodia.
Gross profit 6,725 6,658 1.0% 26,278 27,668 -5.0% 27,417 95.8%
Domestic 5,540 5,554 -0.3% 22,047 23,499 -6.2% 23,060 95.6%
Overseas 1,185 1,104 7.3% 4,231 4,169 1.5% 4,357 97.1%
Gross margin reduced 3.3% pts yoy as input cost
increased due to the global supply chain disruption,in
which average whole milk powder price rose 30.0% yoy in
GPM 42.5% 46.2% -3.6% pts 43.1% 46.4% -3.3% pts 43.6% -0.4% pts FY21. In addition, VNM buys sugar from domestic
producers who import raw sugar for production. Thus the
company is also indirectly affected by the anti-dumping
tax on sugar in 2H21.
Domestic 42.5% 45.8% -3.3% pts 43.1% 46.2% -3.2% pts 43.5% -0.4% pts
Overseas 42.3% 47.9% -5.6% pts 43.5% 47.4% -3.9% pts 44.1% -0.6% pts
SG&A 4,287 4,512 -5.0% 14,518 15,406 -5.8% 14,586 99.5%
SG&A as % revenue plunged 2.0% pts yoy as the
SG&A as % of revenue 27.1% 31.3% -4.2% pts 23.8% 25.8% -2.0% pts 23.2% 0.7% pts company adjusted the selling expense to suit the market
condition, thus preserving a stable net profit margin
EBIT 2,438 2,146 13.6% 11,761 12,263 -4.1% 12,831 91.7%
EBIT margin 15.4% 14.9% 0.5% pts 19.3% 20.6% -1.3% pts 20.4% -1.1% pts
Pre-tax profit 2,688 2,672 0.6% 12,922 13,519 -4.4% 13,736 94.1%
EBT margin 17.0% 18.5% -1.5% pts 21.2% 22.7% -1.5% pts 21.8% -0.6% pts
Tax 475 436 9.0% 2,289 2,283 0.3% 2,404 95.2%
Tax rate 17.7% 16.3% 1.4% pts 17.7% 16.9% 0.8% pts 17.5% 0.2% pts
Net profit 2,196 2,185 0.5% 10,532 11,099 -5.1% 11,332 92.9%
Net margin 13.9% 15.1% -1.3% pts 17.3% 18.6% -1.3% pts 18.0% -0.7% pts
FD EPS (VND) 943 936 0.7% 4,517 4,770 -5.3% 4,818 93.8%
Source: VNDIRECT RESEARCH, COMPANY REPORTS
[10 Feb 2022] Analyst meeting’s key takeaways

• The company shared its view that FY22F will grow slightly in all product
lines. However, the infant formula market share is being competed by
foreign milk brands and partly influenced by the declining birth rate.
Therefore, the company's new strategy is to focus on developing
powdered milk products for the elderly.
• Progress of new dairy farm projects: 1) farm project in Laos (scale of
8,000 cows) expected to produce products in 2023F, 2) Moc Chau farm
project (scale of 4,000 cows) has started construction, and 3) the cow
farm project in Can Tho (with a scale of 8,000 cows) is in the process of
applying for a permit.
• VNM has planned to invest in a dairy factory in Hung Yen with a total
investment of VND4,600bn (total design capacity is estimated at 400
VNDIRECT RESEARCH
million liters/year). The project is built in two phases and is part of VNM's
2022-2026F strategic plan.
• The company plans to process products of MCM to bring MCM’s
products to the Central and Southern markets. Currently, MCM is
implementing plans 1) planning the farm from 1,500 to 2,000 cows, 2)
starting a new farm with 4,000 cows.
• “Vietnam dairy dream” Chain: Expected to open 120 more stores in
2022, bringing the total number of stores to 700. “Vietnam dairy dream”
stores will not only sell VNM’s products but also sell products of member
companies and other reputable products in the market.
FY22-23F Outlook
Stable milk powder prices to ease input cost pressure
We expect milk powder prices to stable in 2022F thanks to a rebound in supply
and a gradual decrease in demand for milk powder from China. According to
Eurostat, milk production is projected to recovery on the back of higher yields in
2022F. In addition, RaboResearch expects China to slow purchases and draw
down its whole milk powder (WMP) and skim milk powder (SMP) stocks in
2022F. As China is the biggest customer in global dairy markets, we believe this
will gradually impact global milk powder prices to cool down in 2022F from the
peak in 2Q21.
In addition, the farm in Quang Ngai (including 4,000 cows) has been put into
operation and the cow farm project in Lao is expected to produce products in
early 2023F. We expect that these two projects will provide VNM with about 64m
liters/year, rising VNM’s autonomy in input materials by 4% in 2023F. According
to the management, the company has conducted two price hikes in Dec 2021
and Jan 2022 with total price increases of 3-4%. Currently, VNM has fixed the
input milk powder price for production until Jun 2022. VNM also expect that there
will be no more ASP increase until year end, unless there is a significant increase
in input price. Thus, we forecast VNM’s gross margin will slightly improve by
0.7%/0.6% pts in FY22-23F after dropping 3.3% in FY21.
Figure 7: Average whole milk powder price and VNM’s gross profit Figure 8: Global milk production is expected to recover in 2022F
margin (%) from 1Q11 to 4Q21
Source: VNDIRECT RESEARCH, FIINPRO Source: VNDIRECT RESEARCH, EUROSTAT
Domestic dairy demand to recovery following the “reopenings”

We expect dairy demand in 2022F to increase by 6% yoy, higher than that of
4% yoy seen in last year; in term of volume thanks to 1) low base in 2021 dairy
consumption, 2) high number of covid-19 cases in 1Q21 will increase dairy
consumption demand to improve health, and 3) increasing consumers’
awareness of health issues after the pandemic leading to rising demand for
VNDIRECT RESEARCH
immune-boosting products such as yogurt. Besides, Vietnam is still in the group

of countries with relatively low milk consumption, with only 26-27 kg/person/year
(the global average of 100 kg/person/year and the average in Asia of 38
kg/person/year). Therefore, we believe that milk consumption in Vietnam will
continue to increase in the upcoming years.
The upcoming Hung Yen dairy factory will be the growth engine since
2024F
In order to capture the potential growth of Vietnam's dairy demand, VNM target
to build a dairy factory in Hung Yen with a total investment of VND4,600bn and
a total design capacity estimated at 400m liters/year. This will be VNM's largest
dairy factory in the Northern and be oriented to become another mega dairy
factory in Vietnam. The project is divided into 2 phases and has now been
approved by Hung Yen province for investment policy. The factory is expected
to be put into operation from 2024F and will contribute about 15-20% to VNM's
revenue (we estimate based on the capacity of Vietnam Dairy Factory at 800m
liters/year). We believe that the new factory will also help VNM consolidate its
leading position in Vietnam dairy industry with more than 13 dairy factories
across the country, including 2 mega factories 1) Vietnam Dairy Factory
(producing liquid milk, capacity of 800m liters/year), and 2) Vietnam Powdered
Milk Factory (producing powdered milk, with a capacity of nearly 54,000
tons/year).
Change in FY22-23F earnings forecasts

We change our assumptions on VNM’s forecasts as follows:
• We reduced domestic sales by 3.1%/3.1% respectively in FY22/23F to
be in line with FY21 figures and reflect a slower-than-expected
consumer demand recovery.
• Gross profit margin decreases by 1.5% pts/2.0% pts in FY22/23F vs.
previous report to reflect 15.0%/20.0% increase in milk powder price
assumption and 2%/1% yoy in sugar price due to the anti-dumping tax.
Besides, we expect dairy farm in Laos (including 8,000 cows) to produce
products from 2023F instead of from 1Q22F in the previous forecast.
• SG&A (selling and general & admin expenses) decrease by 3.9%/2.8%
in FY22-23F as we believe the company will continue to lower marketing
budget to cushion margin amid high material price condition.
Figure 9: FY22-23F earning revision
2021 2022F 2023F
VNDbn Old New Chg Old New Chg
Revenue 60,919 66,584 64,738 -2.8% 70,900 68,944 -2.8%
Domestics 51,202 55,665 53,967 -3.1% 58,953 57,148 -3.1%
Oversea 9,717 10,918 10,771 -1.3% 11,947 11,796 -1.3%
Gross profit 26,278 30,191 28,329 -6.2% 32,855 30,598 -6.9%
Blended GPM 43.1% 45.3% 43.8% -1.5% pts 46.4% 44.4% -2.0% pts
Domestics 43.1% 45.4% 43.6% -1.8% pts 46.5% 44.0% -2.5% pts
Oversea 43.5% 44.9% 44.7% -0.2% pts 45.7% 46.1% 0.4% pts
SG&A expenses 14,518 16,257 15,622 -3.9% 17,446 16,965 -2.8%
SG&A as % of revenue 23.8% 24.4% 24.1% -0.3% pts 24.6% 24.6% 0.0% pts
EBIT 11,760 13,933 12,706 -8.8% 15,439 13,634 -11.7%
EBIT margin 19.3% 20.9% 19.6% -1.3% pts 21.8% 19.8% -2.0% pts
Pre-tax profit 12,922 14,823 13,574 -8.4% 16,465 14,610 -11.3%
Pre-tax profit margin 21.2% 22.3% 21.0% -1.3% pts 23.2% 21.2% -2.0% pts
Net Profit 10,532 11,948 10,912 -8.7% 13,271 11,745 -11.5%
Net profit margin 17.3% 17.9% 16.9% -1.0% pts 18.7% 17.0% -1.7% pts
FD EPS (VND) 4,546 5,146 4,700 -8.7% 5,716 5,058 -11.5%
VNDIRECT RESEARCH
VNDIRECT RESEARCH
Valuation
Rolling P/E (x) (lhs) EPS growth (rhs) Rolling P/B (x) (lhs) ROAE (rhs)
23.0 6% 9.3 43%

22.0 4%
21.0 3% 8.3 40%
20.0 1%
19.0 0% 7.3 37%
18.0 -2%
17.0 -4% 6.3 35%
16.0 -5%
15.0 -7% 5.3 32%
14.0 -8%
13.0 -10% 4.3 29%
01-19A 07-19A 01-20A 07-20A 01-21A 07-21A 01-22E 07-22E 01-19A 07-19A 01-20A 07-20A 01-21A 07-21A 01-22E 07-22E
Income statement Cash flow statement

(VNDbn) 12-21A 12-22E 12-23E (VNDbn) 12-21A 12-22E 12-23E
Net revenue 60,919 64,738 68,944 Pretax profit 12,922 13,565 14,601
Cost of sales (34,641) (36,410) (38,346) Depreciation & amortisation 2,367 2,478 1,786
Gen & admin expenses (1,567) (1,838) (2,155) Tax paid (2,357) (2,404) (2,587)
Selling expenses (12,951) (13,784) (14,810) Other adjustments (937) (834) (942)
Operating profit 11,760 12,706 13,634 Change in working capital (2,563) 332 (297)
Operating EBITDA 13,882 14,472 15,492 Cash flow from operations 9,432 13,138 12,560
Depreciation and amortisation (2,121) (1,766) (1,858) Capex (1,531) (2,266) (2,413)
Operating EBIT 11,760 12,706 13,634 Proceeds from assets sales 134 15 32
Interest income 1,215 1,359 1,455 Others (3,536) (1,665) (1,473)
Financial expense (202) (454) (441) Other non-current assets changes 1,000 (216) (61)
Net other income 195 (2) (2) Cash flow from investing activities (3,933) (4,133) (3,915)
Income from associates & JVs (45) (45) (45) New share issuance 318 0 0
Pre-tax profit 12,922 13,565 14,601 Shares buyback 0 0 0
Tax expense (2,290) (2,404) (2,587) Net borrowings 2,046 (875) 75
Minority interest (100) (257) (276) Other financing cash flow (4) 0 0
Net profit 10,532 10,905 11,737 Dividends paid (7,621) (8,360) (8,360)
Adj. net profit to ordinary 10,532 10,905 11,737 Cash flow from financing activities (5,261) (9,235) (8,285)
Ordinary dividends (8,360) (8,360) (8,360) Cash and equivalents at beginning of period 2,111 2,349 2,119
Retained earnings 2,173 2,545 3,377 Total cash generated 237 (230) 361
Cash and equivalents at the end of period 2,349 2,119 2,479
Balance sheet
(VNDbn) 12-21A 12-22E 12-23E Key ratios
12-21A 12-22E 12-23E
Cash and equivalents 2,349 2,119 2,479
Dupont
Short term investments 21,026 22,658 24,131 Net profit margin 17.3% 16.8% 17.0%
Accounts receivables 5,822 6,142 6,541 Asset turnover 1.20 1.21 1.25
Inventories 6,773 6,474 6,894 ROAA 20.7% 20.3% 21.2%
Other current assets 162 244 260 Avg assets/avg equity 1.49 1.54 1.55
ROAE 30.8% 31.2% 32.9%
Total current assets 36,131 37,637 40,305
Efficiency
Fixed assets 13,837 13,505 13,329
Days account receivable 26.2 25.9 25.9
Total investments 740 772 773 Days inventory 71.4 64.9 65.6
Other long-term assets 2,625 2,122 2,249 Days creditor 44.4 42.8 43.2
Total assets 53,332 54,036 56,657 Fixed asset turnover 4.24 4.74 5.14
Short-term debt 9,382 8,416 8,480 ROIC 23.2% 25.0% 25.4%
Liquidity
Accounts payable 4,214 4,265 4,542
Current ratio 2.1 2.3 2.4
Other current liabilities 3,472 3,774 4,019 Quick ratio 1.7 1.9 2.0
Total current liabilities 17,068 16,455 17,041 Cash ratio 1.4 1.5 1.6
Total long-term debt 76 167 178 Cash cycle 53.1 48.1 48.3
Other liabilities 338 2,444 1,969 Growth rate (yoy)
Share capital 20,900 20,900 20,900 Revenue growth 2.2% 6.3% 6.5%
Operating profit growth (4.1%) 8.0% 7.3%
Retained earnings reserve 7,594 9,049 11,252
Net profit growth (5.1%) 3.5% 7.6%
Shareholders' equity 35,326 34,480 36,978 EPS growth (5.1%) 3.5% 7.6%
Minority interest 524 490 490
Total liabilities & equity 53,332 54,036 56,657
VNDIRECT RESEARCH
DISCLAIMER
This report has been written and distributed by Research Department, VNDIRECT Securities Corporation. The information
contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. Unless
otherwise stated, this report is based upon sources that VNDIRECT considers to be reliable. These sources may include but are
not limited to data from the stock exchange or market where the subject security is listed, or, where appropriate, any other market.
Information on the company(ies) are based on published statements, information disclosure and announcements of the
company(ies), and information resulting from our research. VNDIRECT has no responsibility for the accuracy, adequacy or
completeness of such information.
All estimates, projections, forecasts and expression of opinions contained in this report reflect the personal views and opinions of
the analyst(s) responsible for the production of this report. These opinions may not represent the views and position of VNDIRECT
and may change without notice.
This report has been prepared for information purposes only. The information and opinions in this report should not be considered
as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments.
VNDIRECT takes no responsibility for any consequences arising from using the content of this report in any form.
This report and all of its content belongs to VNDIRECT. No part of this report may be copied or reproduced in any form or
redistributed in whole or in part, for any purpose without the prior written consent of VNDIRECT.
RECOMMENDATION FRAMEWORK
Stock Ratings Definition:
Add The stock’s total return is expected to reach 15% or higher over the next 12 months.
Hold The stock’s total return is expected to be between negative 10% and positive 15% over the next 12
months.
Reduce The stock’s total return is expected to fall below negative 10% over the next 12 months.
The total expected return of a stock is defined as the sum of the: (i) percentage difference between the target price and
the current price and (ii) the forward net dividend yields of the stock. Stock price targets have an investment horizon of 12
months.
Sector Ratings Definition:

Overweight An Overweight rating means stocks in the sector have, on a market cap-weighted basis, a positive
absolute recommendation.
Neutral A Neutral rating means stocks in the sector have, on a market cap-weighted basis, a neutral absolute
recommendation.
Underweight An Underweight rating means stocks in the sector have, on a market cap-weighted basis, a negative
absolute recommendation.
Hien Tran Khanh – Research Director

Email: hien.trankhanh@vndirect.com.vn
Hien Ha Thu – Analyst
Email: hien.hathu@vndirect.com.vn
–
–
Email:
Email:
VNDIRECT Securities Corporation
1 Nguyen Thuong Hien Str – Hai Ba Trung Dist – Ha Noi
Tel: +84 2439724568
Email: research@vndirect.com.vn
Website: https://vndirect.com.vn
Vinamilk (VNM) [OUTPERFORM +19.4%] Update Report
Industry: Dairy 2021 2022F 2023F 2024F VNM VNI

Report Date: June 1, 2022 Rev Growth 2.2% 5.1% 2.5% 4.8% 20%
Current Price: 18 March 2011
VND71,900 EPS Growth -5.3% -3.4% 4.5% 6.2% 10%
Current Target Price: VND82,000 GPM 43.1% 40.8% 40.9% 41.2% 0%
Previous Target Price: VND93,000 NPM 17.3% 15.8% 16.1% 16.4% -10%
Upside to TP: +14.0% EV/EBITDA 10.1x 10.2x 9.8x 9.2x -20%
Dividend Yield: 5.4% P/Op CF 14.4x 12.6x 12.1x 11.5x -30%
TSR: +19.4% P/E 15.9x 16.4x 15.7x 14.8x May-21 Aug-21 Nov-21 Feb-22 May-22
Market Cap: USD6.5bn VNM Peers* VNI Company Overview

Foreign Room: USD3.0bn P/E (ttm) 16.3x 17.8x 13.9x Vinamilk is the largest dairy company in Vietnam
ADTV30D: USD7.2mn P/B (curr) 4.7x 3.2x 2.2x with more than 60% of volume market share. With
State Ownership: 36.0% Net D/E -32.6% -9.5% N/A more than 40 years of experience, Vinamilk has
Outstanding Shares: 2,090 mn ROE 29.0% 18.3% 15.9% established a prominent brand name for its portfolio
Fully Diluted Shares: 2,090 mn ROA 17.7% 8.6% 2.6% that includes liquid milk, powdered milk, yogurt,
3-yr PEG: 7.0 * Medians of foreign peers condensed milk and other beverages.
Ha Huynh
Analyst
Domestic growth and gross margin still face headwinds
ha.huynhthu@vcsc.com.vn  We cut our target price (TP) by 12% as we believe VNM’s low-single-digit 2021-2026 EPS CAGR
+84 28 3914 3588 ext. 185
of 4% (vs 2015-2020 EPS CAGR of 7%) that is underpinned by constricted growth prospects will
Nam Hoang restrain the stock from a strong valuation re-rating. Nevertheless, we maintain our OUTPERFORM
Manager rating as VNM’s 2022F P/E of 16x (based on our forecasts) looks undemanding vs a 5Y average
nam.hoang@vcsc.com.vn peer median TTM P/E of 26x. VNM also generates strong operating cash flow and a solid dividend
+84 28 3914 3588 ext. 124 yield of ~5%.
 Our lower TP is derived from two key factors. First, we curtail our aggregate 2022F-2024F NPAT
by 9% amid an expected slow recovery in dairy consumption and rallies in input prices in 2022.
Second, we reduce our target P/E from 20x to 18x, reflecting our above views regarding VNM’s
growth outlook and re-rating prospects. These factors are partly offset by the positive effect of
rolling our TP forward to mid-2023 vs YE2022 as previously.
 Downside (Upside) risks: Weaker/(higher)-than-expected increase in selling prices to offset
increased input costs; weaker/(stronger)-than-expected recovery of dairy consumption; worse/
(better)-than-expected product renovation and innovation.
We expect 2022 growth prospects to be curbed by dampened consumer spending power,
coupled with declining growth of condensed milk and formula milk. In January 2022, we
projected FMCG consumption to remain below 2019’s levels by an estimated 5%-10% due to COVID-
19’s hit on the purchasing power of mass consumers. We see a further downside risk to our FMCG
consumption forecast due to emerging inflationary pressure. Furthermore, the condensed milk
segment was adversely impacted from intense competition from Malaysian products in Q1 2022.
Management expects this competition will be prolonged and pose difficulties for VNM over the next
two years. We have also observed a stiffer competition landscape for VNM in the infant formula
segment with constant new product rollouts from smaller competitors (e.g., Nutifood and VitaDiary).
Conservative price adjustment approach to cushion GPM amid input cost inflation. Per
management, VNM’s average selling price has increased by 3.3% YTD and has the potential of to
increase to 5% for full-year 2022. Meanwhile, VNM’s input cost base for H1 2022 increased ~26%
YoY, per our estimates. Beginning in April 2022, amid high global milk prices, VNM has locked in milk
powder prices for production up to August 2022. Despite the recent decline in material prices, they
are still higher than in 2021. We expect milk prices to remain elevated for at least the rest of the year
due to disruptions of fertilizer and feed supplies as well as inflationary pressure stemming from the
Russia-Ukraine conflict.
See important disclosure at the end of this document www.vcsc.com.vn | VCSC<GO> June 1, 2022 | 1
Q1 2022: Slow domestic sales, GPM remains under siege
Figure 1: VNM’s Q1 2022 results
VND bn Q1 2021 Q1 2022 YoY VCSC comments HOLD
Net revenue 13,190 13,878 5%
Domestic dairy revenue ex-MCM (Moc Chau Milk – VNM’s indirect
subsidiary) inched up 3.5% YoY in Q1 2022, while sales in modern
trade accelerated +30% YoY. As such, we believe sales in the
traditional trade — VNM’s primary distribution channel — were
sluggish due to dampened consumer spending power in the wake of
Domestic dairy, COVID-19 and current inflationary pressure. In addition, management
11,178 11,658 4%
sugar and others commented that some mom-and-pop stores were remained closed in
early 2022 due to the impact of COVID-19.
MCM’s revenue equaled 6% of VNM’s consolidated domestic revenue
in Q1 2022. On a standalone basis, MCM’s revenue increased 8.6%
YoY in Q1 2022 as it continued to leverage VNM’s distribution
capabilities.
Exports 1,166 1,139 -2%
Driftwood experienced 40% YoY revenue growth while Angkor Milk
posted high single-digit revenue growth. These results were driven by
Driftwood, Angkor
846 1,081 28% a recovery of demand after the reopening of schools and elevated
Milk
demand from hotels in the US, in addition to stronger distribution
activities in Cambodia.
Gross profit 5,755 5,625 -2%

Domestic dairy,
4,858 4,779 -2%
sugar and others
Exports 710 626 -12%
Driftwood, Angkor
187 220 18%
Milk
Due to an increase in employee and transportation expenses, which

surged 41% YoY and 30% YoY, respectively in Q1 2022. Meanwhile,
Selling expenses -2,586 -2,636 2%
VNM cut advertising expenses by 20% YoY in Q1 2022 to protect its
bottom line.
G&A expenses -367 -369 0%
Operating profit 2,802 2,620 -6%
There was (1) a one-off financial expense of VND73bn in Q1 2022
Non-operating items 352 144 -59% due to a exchange rate difference from derivative contracts and (2) a
one-off supplier rebate of VND75bn that was recorded in Q1 2021.
PBT 3,154 2,764 -12%
NPAT-MI 2,576 2,266 -12%
Mainly due to substantial rallies in prices of key raw materials such as

GPM 43.6% 40.5%
milk powder and sugar.
Domestic dairy,
43.5% 41.0%
sugar and others
Exports 60.9% 54.9%
Driftwood, Angkor
22.1% 20.4%
Milk
Effective tax rate 17.7% 17.4% Tax benefits at factories gradually phased out.
Source: VNM, VCSC
2022F: High material costs remain a headwind
Figure 2: VCSC's 2022 forecasts
VND bn 2021
2022F
(old)
2022F
(new)
YoY VCSC comments on New 2022F HOLD
Revenue 60,919 65,047 64,012 5%
We assume sales volume to slide 0.1% YoY in 2022, a 3% YoY lower
growth rate than in our previous Update Report due to weaker-than-
Domestic dairy,
51,202 54,448 53,432 4% expected dairy consumption and stiffer competition in the condensed
sugar and others
milk and infant formula milk segments. In addition, we assume ASPs
to increase 4.5% YoY in 2022.
Partly thanks to revenue contributions from VNM’s new joint venture
Exports 6,128 6,743 6,682 9% with Del Monte in the Philippines, which we project at VND186bn
(USD8mn) for 2022. The remaining projected growth is attributed to
the existing export markets — especially the Middle East.
Primarily lifted by a projected 15% YoY growth in Angkor Milk’s
Driftwood,
3,589 3,856 3,898 9% revenue on the back of Cambodia’s rising dairy consumption and
Angkor Milk
Angkor Milk’s strong brand and distribution.
Gross profit 26,278 27,942 26,143 -1%

Domestic dairy,
22,047 23,273 21,503 -2%
sugar and others
Exports 3,503 3,832 3,797 8%
Driftwood, Angkor
728 837 843 16%
Milk
Mainly driven by our forecast increase in employee and

transportation expenses. Meanwhile, we project zero growth in
Selling expenses -12,951 -13,938 -13,129 1%
advertising & promotion expenses in 2022 as VNM takes efforts to
protect its bottom line.
G&A expenses -1,567 -1,649 -1,630 4%
Operating profit 11,760 12,356 11,384 -3%
Non-operating items 1,162 1,214 1,217 5% Mainly driven by net interest income.
Profit before tax 12,922 13,570 12,601 -2%
NPAT-MI 10,532 10,923 10,132 -4%
EBITDA 14,127 14,883 13,912 -2%
GPM 43.1% 43.0% 40.8% Elevated input costs, which are partly offset by selling price hikes.
Domestic dairy,
43.1% 42.7% 40.2%
sugar and others
Exports 57.2% 56.8% 56.8%
Driftwood, Angkor GPM expansion thanks to a larger revenue contribution from Angkor
20.3% 21.7% 21.6%
Milk Milk, which generates a wider GPM than Driftwood.
Effective tax rate 17.7% 18.2% 18.2% Tax benefits at factories are slated to gradually phase out.
Source: VNM, VCSC
We expect gloomy growth prospects in 2022 due to dampened consumer spending power,
coupled with declining growth of condensed milk and formula milk.
As discussed in the Consumer Sector section of our 2022 Strategy Report, From pandemic to
HOLD
endemic, dated January 7, 2022, we projected FMCG consumption will remain below 2019’s levels
by an estimated 5%-10% due to COVID-19’s hit on the purchasing power of low-income and mass
consumers. We see a further downside risk to our FMCG consumption forecast due to emerging
inflationary pressure. VNM’s domestic sales growth deceleration from more than 20% YoY in October
2021 to 7% YoY in Q4 2021 (from a low base) underscores a bumpier road to recovery.
Furthermore, the two main segments with the most disappointing results in Q1 2022 were condensed
milk and infant formula milk, which combine to account for 33% of VNM’s sales mix, per our estimates.
The condensed milk segment was adversely impacted by intense competition from imported
Malaysian products that have lower prices than VNM’s products by ~18%-50% on average, per our
estimates (1). The reason for the lower prices of Malaysian products is that sweetened condensed milk
in Malaysia has palm oil added in place of milk fat, while VNM uses butter oil. Per VNM’s management,
Malaysia is a country famous for palm oil plantations; therefore, Malaysian condensed milk producers
enjoy better input costs than VNM. According to industry’s experts, palm oil is considered the cheapest
vegetable oil used in condensed milk production. Management expects this competition to be
prolonged and pose difficulties for VNM over the next two years. In addition, management expects to
make further investment in marketing & promotional activities for condensed milk, which we believe
will partly curtail its profitability. Regarding formula milk, we have observed a stiffer competition
landscape for VNM with constant new product rollouts from smaller competitors such as Nutifood and
VitaDiary.
Conservative price adjustment approach to cushion GPM amid input cost inflation. Per
management, VNM’s selling price has increased by 3.3% YTD on average and has the potential to
increase to 5% for full-year 2022. Meanwhile, the input cost base for H1 2022 increased ~26% YoY,
per our estimates. Since April 2022, amid high global milk powder prices, VNM has locked in milk
powder prices for production up to August 2022. Despite the recent decline in material prices, these
prices are still higher than in 2021. We expect milk prices to remain elevated for at least the rest of
the year due to disruption to fertilizer and feed supplies as well as inflationary pressure resulting from
the Russia-Ukraine conflict — as both countries are leading exporters of nitrogen-based fertilizers
(used for dairy farming) and wheat (an important feed for cattle along with corn and soy). This situation
has limited growth in milk (2) per cow due to higher feed, labor and other production costs. As a result,
low margins have resulted in a large exit of dairy farmers. New Zealand and the EU account for ~70%
of milk exports, followed by the US and Australia. According to Fonterra (3), New Zealand milk
production decreased 5.6% YoY in April 2022 and down 3.7% in the 12 months to April 2022, while
EU milk production for the 12 months to February 2022 was up 0.2% compared to the same period
the year prior. US milk production also decreased 1.0% YoY in April 2022. Fonterra forecasts 2021-
2022 Farmgate Milk Price (4) at USD9.10-9.50 per kgMS (5) with a midpoint of USD9.30 per kgMS,
which is the highest forecast milk price in Fonterra’s history.
Figure 3: Historical milk prices (USD/tonne)
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jul-19
Jul-20
Jul-21
Jun-19
Aug-19
Nov-19
Dec-19
Jan-20
Jun-20
Nov-20
Dec-20
Jan-21
Jun-21
Nov-21
Dec-21
Jan-22
May-19
Sep-19
Oct-19
Apr-20
Apr-21
Apr-22
May-22
Feb-20
Mar-20
May-20
Aug-20
Sep-20
Oct-20
Feb-21
Mar-21
May-21
Aug-21
Sep-21
Oct-21
Feb-22
Mar-22
WMP SMP AMF
Source: Global Dairy Trade, VCSC (WMP: Whole Milk Powder, SMP: Skim Milk Powder, AMF: Anhydrous
Milk Fat)
(1)
Our representative group of Malaysian imported products (i.e., Delipure, Larosee, Famyl, ES and Dairy Champ) has a median of selling price lower than
VNM’s Ngoi Sao Phuong Nam by 18% on average and VNM’s Ong Tho by 54% on average.
(2)
Raw milk is used to produce milk powder by boiling the milk under reduced pressure at low temperature until it is a powder.
(3)
Fonterra Co-operative Group Limited is New Zealand’s largest multinational publicly traded dairy cooperative owned by ~10,500 New Zealand farmers.
The company is responsible for ~30% of the world's dairy exports.
(4)
(5)
Farmgate Milk Price determines the amount Fonterra pays for milk purchased from farmer shareholders.
kgMS: kilogram of milk solids. Milk solids refer to the amount of protein and fat in a quantity of milk.
HOLD
Valuation
We maintain our valuation mix of 70%/30% for DCF/PER. We attribute a higher weighting to DCF
owing to VNM’s simple business structure and robust cash generation. Meanwhile, we apply a 30%
weighting to the P/E valuation given VNM’s extensive scale that often puts it in comparison with
regional companies by investors.
In this Update Report, we reduce our target P/E from 20x to 18x, reflecting our views regarding the
slow growth prospects of VNM and a lack of catalysts that could stage a robust valuation re-rating
for the stock. We also roll our TP forward to mid-2023 vs YE2022 as previously.
Our revised target price puts VNM’s 2022F P/E at ~19x, which is below VNM’s five-year average
TTM P/E of 21x.
Our implied target 2022F P/E for VNM represents a ~24% discount vs the five-year average TTM
P/E of regional peers, which we think is justified by peers’ stronger earnings growth outlook.
Figure 4: Summary of VCSC’s valuation for VNM
Fair value
Method Weighting Contribution (VND/sh)
(VND/sh)
DCF 83,336 70% 58,335
PER (18x 2022F EPS) 78,534 30% 23,560
Target price (VND) 82,000
Implied 2022F/2023F P/E at TP 18.8x/18.0x
Source: VCSC
Figure 5: DCF valuation for VNM

Previous
Cost of Capital Revised FCFF (Five-year) VND bn
Report
Beta 0.6 0.6 PV of Free Cash Flows 42,822
Market Risk Premium % 7.0 7.0 PV of Terminal Val (3% g) 123,875
Risk Free Rate % 5.5 5.5 PV of FCF and TV 166,697
Cost of Equity % 9.7 9.7 + Cash & ST investments 21,514
Cost of Debt % 1.5 5.0* - Debt 11,013
Target Debt % 5.0 5.0 - Minority Interest 3,030
Target Equity % 95.0 95.0 Equity Value 174,168
Tax Rate % 17.7 17.7 Shares (million) 2,090
WACC % 9.3 9.4 Value per share, VND 83,336
Source: VCSC (*Although most of VNM’s current debt is USD-denominated, USD interest rates have
increased substantially over the past three months. Considering hedging costs incurred for VNM’s hedging
contract against USD currency risk, we revert our long-term cost of debt assumption for VNM to 5.0%.)
Figure 6: Cash flow projections for VNM
VND bn 2022F 2023F 2024F 2025F 2026F
Earnings before interest &

tax, adjusted for bonus and 11,730 12,330 13,175 14,009
HOLD
14,876
welfare funds
- Tax -2,138 -2,307 -2,529 -2,757 -2,947
+ Depreciation & amortization 2,527 2,684 2,841 2,998 3,154
- Capex -2,506 -2,555 -2,653 -2,776 -2,906
- Working cap increase 38 -25 -138 -194 -214
Free Cash Flow 9,651 10,126 10,696 11,280 11,963
PV of FCF 9,226 8,847 8,540 8,231 7,978
Total PV of FCF 9,226 18,073 26,613 34,844 42,822
Source: VCSC (* Including goodwill amortization)
Figure 7: Sensitivity analysis of our target price for VNM in relation to DCF’s WACC and
terminal growth rate, ceteris paribus
VNM Target Price
WACC
(VND)
8.4% 8.9% 9.4% 9.9% 10.4%
1.0% 78,000 75,000 72,000 69,000 67,000
Terminal growth 2.0% 84,000 80,000 76,000 73,000 71,000
(g) 3.0% 91,000 86,000 82,000 78,000 75,000
4.0% 103,000 96,000 90,000 85,000 80,000
5.0% 121,000 109,000 101,000 94,000 88,000
Source: VCSC
Comparable peers
For our peer group, we select representative Asian dairy players in their respective markets.
Figure 3: Comparable peers

2020 2021F-
TTM
TTM Debt/ TTM TTM value 2023F
(USD mn) Mkt Y-o-Y TTM Y-o-Y TTM LQ net
Net Equity ROE ROA market EPS
Company cap % NPAT % P/E P/B margin
Sales % % % share CAGR
%
% %
600887 CH 35,911 17,811 10.3 1,464 7.2 46.1 22.2 9.1 24.6 4.7 8.2 25.0 17.6
2319 HK 19,548 13,667 15.9 779 42.6 64.4 14.4 5.6 26.0 3.6 5.7 20.7 19.7
2269 JP 7,399 9,022 -15.0 779 33.3 11.4 13.5 8.0 10.4 1.3 8.6 10.8 -5.4
600597 CH 2,404 4,592 8.6 103 4.5 39.8 9.2 3.0 22.5 2.0 2.2 2.2 10.0
ULTJ IJ 1,201 483 18.2 81 8.7 29.6 22.2 13.7 13.1 2.9 16.7 16.5 N/A
DLM MK 487 281 6.0 60 272.8 4.0 85.8 39.3 8.5 5.3 21.4 26.7 -38.1
Median 4,901 6,807 9.5 441.0 21.0 34.7 18.3 8.6 17.8 3.2 8.4 18.6 10.0
Average 11,158 7,642 7.4 544.4 61.5 32.5 27.9 13.1 17.5 3.3 10.5 17.0 0.8
VNM VN 6,576 2,694 5.0 447 -6.3 26.4 29.0 17.7 16.3 4.7 16.3 50.0 0.5
Source: Bloomberg (consensus forecasts for peers), VCSC (VNM forecasts), Euromonitor (market share); as of June 1, 2022.
Figure 4: Historical TTM P/E of VNM vs peers
40.0
35.0
HOLD
30.0
25.0
20.0
15.0
10.0
Peer median Peer average VNM VNM's 5-year average
Source: Bloomberg, VCSC
Recommendation History
Figure 5: Historical VCSC target price vs share price (VND)
120,000 M-PF
112,200 M-PF
108,800 BUY
BUY BUY
110,000 M-PF 104,600 104,800
104,300
99,400
100,000 O-PF
93,000
90,000
80,000
O-PF
82,000
70,000
60,000
Jul-20
Jul-21
Jun-20
Jan-21
Jun-21
Jan-22
Feb-21
Mar-21
Feb-22
Mar-22
Aug-20
Sep-20
Nov-20
Dec-20
Aug-21
Sep-21
Nov-21
Dec-21
Oct-20
Apr-21
May-21
Oct-21
Apr-22
May-22
Actual price Target price
Source: Bloomberg, VCSC
Financial Statements
P&L (VND bn) 2021 2022F 2023F 2024F B/S (VND bn) 2021 2022F 2023F 2024F
Revenue
COGS
60,919 64,012 65,603 68,728 Cash & equivalents
ST investments
2,349 3,653 HOLD7,111
5,315
-34,641 -37,868 -38,754 -40,393 21,026 21,026 21,026 21,026
Gross Profit 26,278 26,143 26,848 28,336 Accounts receivable 4,368 4,487 4,599 4,818
Sales & Marketing exp -12,951 -13,129 -13,353 -13,972 Inventories 6,773 6,383 6,532 6,809
General & Admin exp -1,567 -1,630 -1,665 -1,729 Other current assets 1,595 1,595 1,595 1,595
Operating Profit 11,760 11,384 11,830 12,634 Total Current assets 36,110 37,144 39,066 41,358
Financial income 1,215 1,397 1,592 1,692 Fixed assets, gross 30,117 32,623 35,178 37,831
Financial expenses -202 -255 -255 -255 - Depreciation -16,280 -18,562 -21,001 -23,596
- o/w interest expense -89 -142 -142 -142 Fixed assets, net 13,837 14,060 14,177 14,235
Associates -45 -45 -43 -41 LT investments 744 744 744 744
Net other income/(loss) 195 120 123 128 LT assets other 2,642 2,396 2,151 1,905
Profit before tax 12,922 12,601 13,247 14,157 Total LT assets 17,222 17,201 17,072 16,884
Income Tax -2,290 -2,297 -2,479 -2,718 Total Assets 53,332 54,344 56,138 58,242
NPAT before MI 10,633 10,304 10,768 11,440
Minority Interest -100 -172 -184 -196 Accounts payable 4,214 3,805 3,950 4,129
NPAT-MI, reported 10,532 10,132 10,584 11,244 Short-term debt 9,382 9,382 9,382 9,382
NPAT-MI, adjusted (1) 10,532 10,132 10,584 11,244 Other ST liabilities 3,472 3,648 3,739 3,917
Total current liabilities 17,068 16,836 17,071 17,429
EBITDA 14,127 13,912 14,514 15,475 Long-term debt 76 76 76 76
EPS reported, VND 4,517 4,363 4,558 4,842 Other LT liabilities 338 338 338 338
EPS adjusted (1), VND 4,517 4,363 4,558 4,842 Total Liabilities 17,482 17,250 17,485 17,842
EPS diluted, adj (1), VND 4,517 4,363 4,558 4,842
DPS, VND 3,900 3,850 3,900 4,100 Preferred Equity 0 0 0 0
DPS/EPS (%) 86% 88% 86% 85% Paid in capital 20,900 20,900 20,900 20,900
(1) Adjusted for one-offs Share premium 0 0 0 0
RATIOS 2021 2022F 2023F 2024F Retained earnings 7,594 7,653 7,970 8,396
Growth Other equity 4,589 5,603 6,661 7,785
Revenue growth 2.2% 5.1% 2.5% 4.8% Minority interest 2,767 2,939 3,123 3,319
Op profit (EBIT) growth -4.1% -3.2% 3.9% 6.8% Total equity 35,850 37,095 38,653 40,400
PBT growth -4.4% -2.5% 5.1% 6.9% Liabilities & equity 53,332 54,344 56,138 58,242
EPS growth, adjusted -5.3% -3.4% 4.5% 6.2%
Y/E shares out, mn 2,089.9 2,090.0 2,090.0 2,090.0
Profitability Y/E treasury shares, mn 0.1 0.1 0.1 0.1
Gross Profit Margin 43.1% 40.8% 40.9% 41.2% CASH FLOW (VND bn) 2021 2022F 2023F 2024F
Op Profit, (EBIT) Margin 19.3% 17.8% 18.0% 18.4% Beginning Cash Balance 2,111 2,349 3,653 5,315
EBITDA Margin 23.2% 21.7% 22.1% 22.5% Net Income 10,532 10,132 10,584 11,244
NPAT-MI Margin, adj, 17.3% 15.8% 16.1% 16.4% D&A 2,121 2,282 2,439 2,595
ROE 32.7% 30.1% 30.4% 31.0% Change in Working Cap -1,705 38 -25 -138
ROA 20.7% 18.8% 19.2% 19.7% Other adjustments -517 -595 -629 -683
Cash from Operations 10,432 11,856 12,368 13,018
Efficiency
Days Inventory On Hand 63 61 60 60 Capital Expenditures, net -1,397 -2,506 -2,555 -2,653
Days Accts, Receivable 25 25 25 25 Investments, net -3,536 0 0 0
Days Accts, Payable 39 36 36 36 Cash from Investments -4,933 -2,506 -2,555 -2,653
Cash Conversion Days 50 50 49 49
Dividends Paid -7,524 -8,046 -8,151 -8,569
Liquidity ∆ in Share Capital 60 0 0 0
Current Ratio x 2.1 2.2 2.3 2.4 ∆ in LT debt -92 0 0 0
Quick Ratio x 1.6 1.7 1.8 1.9 ∆ in ST debt 2,066 0 0 0
Cash Ratio x 1.4 1.5 1.5 1.6 Other financing C/F 228 0 0 0
Debt / Assets 17.7% 17.4% 16.8% 16.2% Cash from Financing -5,261 -8,046 -8,151 -8,569
Debt / Capital 20.9% 20.3% 19.7% 19.0%
Net Debt / Equity -38.8% -41.0% -43.7% -46.2% Net Change in Cash 237 1,304 1,662 1,796
Interest Coverage x 132.4 80.2 83.4 89.1 Ending Cash Balance 2,349 3,653 5,315 7,111
Source: Company data, VCSC
VCSC Rating System
Stock ratings are set based on projected total shareholder return (TSR), defined as (target price – current price)/current
price + dividend yield, and are not related to market performance.
HOLD
Equity rating key Definition
BUY If the projected TSR is 20% or higher
OUTPERFORM If the projected TSR is between 10% and 20%
MARKET PERFORM If the projected TSR is between -10% and 10%
UNDERPERFORM If the projected TSR is between -10% and -20%
SELL If the projected TSR is -20% or lower
The company is or may be covered by the Research Department but no rating or
target price is assigned either voluntarily or to comply with applicable regulation
NOT RATED
and/or firm policies in certain circumstances, including when VCSC is acting in an
advisory capacity in a merger or strategic transaction involving the company.
A rating may be suspended, or coverage terminated, if fundamental information is
RATING SUSPENDED, deemed insufficient to determine a target price or investment rating or due to a
COVERAGE TERMINATED reallocation of research resources. Any previous investment rating and target price
are no longer in effect.
Unless otherwise specified, these performance parameters are set with a 12-month horizon. Movement in share prices may
cause a temporary mismatch between the latest published rating and projected TSR for a stock based on its market price
and the latest published target price.
Target prices are generally based on the analyst's assessment of the stock’s fair value over a 12-month horizon. However,
the target price may differ from the analyst’s fair value if the analyst believes that the market will not price the stock in line
with assessed fair value over the specified time horizon.
Risks: Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely
affect the value, price or income of any security or related instrument mentioned in this report. For investment advice, trade
execution or other enquiries, clients should contact their local sales representative.
Disclaimer
Analyst Certification of Independence
HOLD
We, Ha Huynh and Nam Hoang, hereby certify that the views expressed in this report accurately reflect our personal views about the subject
securities or issuers. We also certify that no part of our compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed in this report. The equity research analysts responsible for the preparation of this report receive
compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall
firm revenues, which include revenues from, among other business units, Institutional Equities and Investment Banking.
VCSC and its officers, directors and employees may have positions in any securities mentioned in this document (or in any related investment)
and may from time to time add to or dispose of any such securities (or investment).VCSC may have, within the last three years, served as
manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities
mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in
relation to the investment concerned or a related investment.
Copyright 2013 Viet Capital Securities Company “VCSC”. All rights reserved. This report has been prepared on the basis of information
believed to be reliable at the time of publication. VCSC makes no representation or warranty regarding the completeness and accuracy of
such information. Opinions, estimates and projection expressed in this report represent the current views of the author at the date of
publication only. They do not necessarily reflect the opinions of VCSC and are subject to change without notice. This report is provided, for
information purposes only, to institutional investors and retail clients of VCSC in Vietnam and overseas in accordance to relevant laws and
regulations explicit to the country where this report is distributed, and does not constitute an offer or solicitation to buy or sell any securities
discussed herein in any jurisdiction. Investors must make their investment decisions based upon independent advice subject to their particular
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Brokerage and Institutional Sales & Trading

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Tech important to promoting dairy industry
21 June 2022
Vietnam News Summary
Vietnam has significant room to promote the dairy industry with the application of technology in
farming and processing to establish a value chain, given the rising demand for dairy products in the
domestic and global markets, according to the Vietnam Ruminant Husbandry Association.
With more than 28,000 farms with a total of nearly 375,000 cow heads and an output of more than 1.2
million tons per year, the dairy industry met only 42 per cent of domestic market demand, while the
rest relies on imports.
According to General Department of Customs statistics, Vietnam spent an average of US$1 billion per
year to import milk in 2018-20. In 2021, Vietnam imported dairy products worth $1.138 billion, an
increase of 12.56 per cent against 2020.
Hoàng Kim Giao, President of the Vietnam Ruminant Husbandry Association, said that the
development of cow herds faced several problems, including the pressure from disease prevention,
farmers lacking knowledge about nutrition for high yield, and limited application of high-tech cow
raising techniques.
In addition, cow husbandry remained scattered, with nearly 60 per cent of cows raised in households,
which was a significant cause for difficulty in controlling disease and ensuring stable milk quality.
He also pointed out a lack of linkage between farmers and milk processing facilities. The increase in
cow herds will also create pressure on the environment, Giao said.
He said it was necessary to increase the application of high-tech cow raising techniques to increase
productivity and quality.
According to Giao, Vietnam has significant room to promote the dairy industry, adding that the focus
would be placed on increasing the application of technology in dairy raising and processing and
establishing a value chain.
Many high-tech dairy cow farms were established recently, such as the Mộc Châu diary complex in
Sơn La Province of Vinamilk, with a total investment of VNĐ3.15 trillion with a cow herd of 4,000,
which was expected to supply about 20 million litres of milk per year.
Tống Xuân Chinh, Deputy Director of the Department of Livestock Production under the Ministry of
Agriculture and Rural Development, said that Vietnam was currently leading Southeast Asia in terms
of the industrialization level of the dairy industry, with the output growth consistently higher than the
growth in the herd.
He added that the country's cow productivity was much higher than in other regions.
Chinh said that the focus should be placed on building a value chain, which was essential to ensuring
sustainable development for the dairy industry.
Chinh pointed out that cow breeding methods had changed positively and contributed mainly to
forming a modern dairy farming and processing industry. Vietnam’s milk and dairy products were
exported to 48 countries with a revenue of more than $300 million in 2021.
The domestic dairy industry earned respective revenues of VNĐ113.7 trillion (US$4.9 billion) and
VNĐ119.3 trillion in 2020 and 2021, mainly from fresh and powdered milk.
In 2021 alone, the industry produced over 1.77 billion litres of fresh milk, up 4.5 per cent year-on-year.
Page 1 © 2022 Factiva, Inc. All rights reserved.

Ericsson supporting Vietnam’s smart manufacturing dream
21 June 2022
With smart manufacturing being an inevitable trend, Ericsson is partnering with various stakeholders to
enable Vietnamese manufacturers to realize their dream of smart factories.
Vietnam’s manufacturing sector is experiencing an industrial revolution to further improve productivity

and sustainably drive the next wave of socioeconomic development and growth, enabled by 5G and
the Internet of Things (IoT), with more manufacturers trending to invest more in automation, with TH
Group, Vinamilk, Tan Hiep Phat, and VinFast being outstanding examples.
Manufacturing companies are betting on 5G to deliver ultra-low latency, high bandwidth, and reliable
communication. As the fastest and most reliable connectivity enabler, 5G will deliver an array of
innovative use cases to increase factory capabilities and boost agility, freeing operations from wired
dependency. 5G-enabled facilities will benefit from sensors placed throughout, monitoring production
processes and collecting data to feed back to machines and production managers. This will greatly
enhance the speed of operations, improve maintenance capabilities, and increase safety.
According to experts, smart manufacturing is an inevitable trend globally. And Vietnam, where 5G is
planned to be commercialized in 2022, is not an exception. Factories and warehouses must leverage
IoT and digitalization to become much more efficient and stay competitive.
According to a recent Ericsson Industry Lab Future of Enterprises report, most manufacturing
enterprises expect to be at least 80 per cent automated within 10 years, with many expecting to see at
least a two-fold rise in the use of ICT-enabled tools within the next five years. Such tools include AI
software, video recognition, AR and VR, automated guided vehicles, and exoskeletons.
Manufacturers believe that in the long-term, automating all elements of work is going to be possible
and economically viable. Three-quarters of decision-makers agree that automation has increased the
speed of production; 68 per cent believe that it has or will lead to reduced costs; and 71 per cent
believe that it has reduced dangerous tasks that carry the risk of accidents and wear-and-tear injuries.
While industries have automated many processes, secure wireless connectivity empowers factory
automation, making industrial automation possible on a much larger scale. By creating a digital
foundation, industrial automation will increase productivity and performance. For instance, Ericsson’s
factory in Estonia has demonstrated that with AR troubleshooting, the average fault detection time
reduction combined with better ergonomics and faster information sharing, can boost productivity by
up to 50 per cent.
As a technology leader in 5G, Ericsson is actively supporting the development of smart factories in
Vietnam and beyond. The company recognizes the need to lead the market in forging strategic 5G
ecosystem partnerships that include cross-industry players, bringing them together with mobile service
providers to deliver compelling digital transformation engagements and new revenue streams.
Ericsson’s cellular technology is empowering manufacturers to create agility through operating more
flexible and advanced operations by allowing efficiency-boosting technologies like AR and
autonomous mobile robots, and unlocking intelligence by transforming data into actionable insights
that raise productivity.
For instance, Ericsson US’ 5G Smart Factory is part of a new wave of manufacturing plants that has
the potential to add between $1.5-2.2 trillion to the global economy annually by 2023.
In Vietnam, Ericsson is planning to invest in various smart initiatives, partnering with other Swedish
companies as well as mobile operator customers. Its ambition is further sharpened by the expectation
that over two-thirds of global manufacturers will relocate to Asia-Pacific by 2025, with Vietnam clearly
attracting a high number of these manufacturing opportunities. And Ericsson is supporting Vietnam in
becoming a regional and global smart manufacturing hub.
Page 2 of 15 © 2022 Factiva, Inc. All rights reserved.

Ericsson is working with Vietnam’s mobile network operators to expand 4G IoT capabilities across the
country, as well as preparing for future 5G capabilities and the broader IoT ecosystem.
“We have proudly partnered with MobiFone, Vinaphone, and Viettel in providing the 5G experience to
the Vietnamese people across selected geographic areas in Hanoi and Ho Chi Minh City. Ericsson is
well-positioned to enable service providers to seamlessly and efficiently transition from 4G to 5G,” said
Denis Brunetti, president of Ericsson in Vietnam and Myanmar. “Our strategic partnership within the IT
industry in Vietnam aims to accelerate the adoption of Industry 4.0, digitally transforming industries,
including manufacturing, agriculture, transport, and energy.”
Vietnam is accelerating National Strategy for Industry 4.0, focusing on increasing the positive impact
of the digital economy, industry digitalization, smart city development, high-tech foreign investment,
elevated labor productivity growth rates, and cybersecurity.
5G mobile network capabilities could play a pivotal role in achieving this vision, supporting an
accelerated adoption of Industry 4.0 across the nation. Vietnam has taken the right approach by
aiming to initially deploy 5G in major urban areas and high-growth industry zones, eventually bringing
the benefits of digital transformation to key industries such as manufacturing, transport, energy,
healthcare, and agriculture.
The processing and manufacturing sector is now the most attractive to foreign-invested enterprises
(FIEs) in Vietnam. According to statistics from Vietnam’s Ministry of Planning and Investment, in the
year to May 20, the country attracted $11.71 billion worth of foreign direct investment, equal to 83.7
per cent of the same period last year.
Among 18 sectors, FIEs invested most in the processing and manufacturing sector with $6.8 billion,
making up 58.2 per cent of the country’s total foreign investment.
Vietnam Investment Review will host a talk show on June 24 themed “Digital Transformation with 5G –
the Path to Smart Factories in Vietnam”, which will be available to watch on VIR’s Facebook and
YouTube channels. (Vietnam Investment Review – June 20)
Vietnam Investment Review: Going smarter remains realm of the giants
1,135 words
21 June 2022
VENEWS
English
Copyright 2022. Vian Company Limited.
In anticipation of huge opportunities in the Fourth Industrial Revolution, leading Vietnamese

manufacturers are developing smart factories. However, there remains a long journey to go for
Vietnam’s manufacturing industry to make it a success.
In April, Tan Hiep Phat Group (THP Group), one of the biggest beverage producers in Vietnam,
officially put into operation the innovative cloud-based platform SAP Ariba as one of the key projects in
its digital transformation strategy in 2021-2026, aiming to eventually make revenues of $1 billion.
THP has partnered with SAP in its digital transformation journey for a decade. During the pandemic,
digital transformation was accelerated successfully, and now procedures such as contract signings are
automated, with e-signatures being used.
The company has thus far garnered strong results thanks to this digitalisation. THP’s exports grew 30
per cent on-year, with its main markets currently North America, Japan, Australia, the Netherlands,
South Korea, and Singapore.
THP is one of several locally-invested groups that are embracing advanced technologies in their
manufacturing, with others including Vinamilk, TH Group, Thaco Madaz, and VinFast.

In February, TH Group began construction of a high-tech foodstuff factory in the northern province of
Thai Binh costing around $27 million. To be completed next year, the facility will boast equipment
imported from Europe, the US, and Japan.
TH Group, owner of the TH true MILK brand, has been continuously making investments in technology
applications in its factories since 2009. The conglomerate’s smart manufacturing journey was marked
when its $1.2-billion Nghe An factory has been recognized as the most concentrated large-scale high-
tech dairy cow production project in the world by the Asian Book of Records.
The group’s milk products have also won awards at home and abroad, such as at World Food Moscow
from 2015 to 2019, ASEAN Best Food Product 2015, Gulfood Dubai 2016, the Stevie Awards 2018
and more.
Hitting new highs
Elsewhere, Vinamilk has changed the operational model towards developing smart storehouses,
applying a model originating from Germany. Moreover, the conveyor system at Vinamilk is supported
with automatic product boxing, thus increasing productivity and accelerating assembly compared to
traditional methods.
Supported by leading advanced technology and robots, Vinamilk’s productivity has continuously
increased and greatly contributed to helping Vinamilk retain its No.1 position in the local dairy market.
Last year Vinamilk’s revenues hit a new record high, reaching over $2.6 billion and up 2.2 per cent on-
year. The growth momentum has continued in the first quarter of 2022 with revenues rising over 5 per
cent on-year to over $603 million.
Like the dairy giant, Vingroup is a valuable name in smart manufacturing. In 2019, its car-making arm
VinFast put into commercial production the country’s first-ever automobile manufacturing factory in the
northern city of Haiphong. With uninterrupted connection and high automation, its processes are on
par with the best in the world and fully meet tech trends in the 4.0 era.
Also that year, the 15-hectare Vinsmart manufacturing plant was officially put into operation with the
capacity of 125 million products a year for the local market and global exports. The facility
manufactures smartphones and other high-tech devices with cutting-edge production lines, carving out
a spot for Vinsmart on the world map of high-tech companies. The plant is expected to become one of
the most modern in the region, with production lines imported from the US, Germany, Japan, and
South Korea.
Meanwhile, Truong Hai Auto Corporation (THACO) began smart manufacturing at its Mazda
automobile manufacturing plant in 2018 when it was inaugurated in Quang Nam province. The $528.6-
million facility is equipped with cutting-edge technology, meeting the global standards of Japan’s
Mazda Group.
Employing thousands of workers and operating a distribution network of about dozens of showrooms
nationwide, THACO uses product lifecycle management software, machining design software, and
product verification solutions from Siemens for research and development (R&D).
Long road to go
The 13th National Party Congress resolution, which set the target for Vietnam to become a developing
country with modern industry and upper-middle-income status by 2030, also sets out the plan for the
country to become a developed and high-income country by 2045.
Several resolutions from the Politburo involve directly speeding up industrialization and modernization
on the basis of scientific and technological development and innovation, and the integration of
information and automation application in industrial production to create intelligent production
processes, smart factory models, and smarter products.

To this end, the Ministry of Industry and Trade (MoIT) is promoting development of smart factories. In
late May, the MoIT in coordination with the northern province of Vinh Phuc and Samsung Electronics
Vietnam, kicked off a smart factory development program. It aims to help 50 businesses to develop
smart factories this year and next, with the first phase benefiting 14 companies in Bac Ninh, Vinh
Phuc, Hanoi, Hung Yen, and Ha Nam.
Experts predict that businesses will be able to increase productivity by 30 per cent when they carry out
smart manufacturing. However, not all manufacturers are yet paying attention to such processes.
Financial capacity, human resources, and operational scale are among the reasons, meaning smart
manufacturing remains the playground of only the biggest players.
According to research released by the World Bank in East Asia and the Pacific in November 2021,
processing and manufacturing among Vietnamese firms involve 70 per cent of machines being
operated by humans while 20 per cent are handmade, 9 per cent use computer-controlled machines,
and less than 1 per cent use advanced technologies like robots.
Moreover, over three-quarters of surveyed small- and medium-sized enterprises, as well as two-thirds
of bigger groups, still have doubts about the benefits of investing in advanced technology.
A report by CSIRO, Australia, and the Ministry of Science and Technology last November also states
that the number of manufacturers involved in R&D and innovation activities remains low.
A recent survey by the MoIT also shows that the majority of businesses are on a low level of smart
manufacturing compared to the requirements of smart factories. Their application of Industry 4.0
technologies remains limited, at just 2-3 per cent.
Nguyen Duc Hien, deputy head of the Central Economic Committee, admitted that development of
smart manufacturing in the country’s process of industrialization towards 2030 will face challenges.
However, he noted that Vietnam’s ICT industry is developing rapidly. The rapid development of the
digital economy and commercialization of 5G, as well as development of core infrastructure with high-
speed broadband, is a good foundation for the acceleration of smart factories,” Hien said.
Vietnam’s green economy: from vision to action

16 June 2022
As the trade-off between business efficiency and “going green” is diminishing, Vietnam’s economy and
enterprises are accelerating towards green and sustainable growth in line with mainstream global
trends.
The world is witnessing mega-trends in geo-politics, globalization and liberalization, climate change
and innovation, with different scenarios. Development issues in recent years are perceived as not
completely new but deeper with qualitative changes, including shifts from economic growth to
sustainable and inclusive development, from “brown economy” to “green economy”, from “linear
economy” to “circular economy” and from “real economy” to “digital economy”.
Despite challenges in both domestic and international markets, State leaders have demonstrated their
strong political commitments towards green growth, agreeing that the transition to an environmentally
friendly economy has created enormous potential to achieve sustainable development.
Green growth is central to achieving the 17 United Nations Sustainable Development Goals (SDGs) by
2030. It is also the focus of national development policies of many countries around the world. Many
governments have implemented or endorsed a Green Growth Strategy which improves the legal and
policy framework together, such as the EU, South Korea, Japan and Vietnam.
In the most recent action, 136 countries – which are responsible for 88 per cent of greenhouse gas
emission and 90 per cent of global GDP – committed to achieve “net zero emissions” by the middle of
the 21st century at the 26th United Nations Climate Change Conference of the Parties (COP26) held
in Glasgow, Scotland (the UK) in November 2021.

Green growth is also clearly stated in the ASEAN Community vision 2025: “ASEAN recognises the
importance of sustainable economic development as an integral part of the region’s growth strategy…
ASEAN would actively promote green development by developing a sustainable growth agenda that
promotes the use of clean energy and related technologies, including renewable energy through green
technology, as well as enhances sustainable consumption and production, and including it in national
development plans.”
However, this trend not only comes from political commitment of governments but also market
pressure.
Consumers are pursuing green consumerism and green lifestyle in which consumers demand green
and safe products. The rising awareness of environmental protection is penetrating deeply into
consumer consciousness which forces manufacturers to green both their products and manufacturing
processes, as well as take into account their social responsibility.
New business models and investment sectors including green economy, circular economy, smart city
and creative economy are capturing enterprises’ attention.
The implementation of international cooperation and commitments, especially high-quality free trade
agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) and EU-Vietnam FTA (EVFTA), accompanying cheaper tools to transition to
green models, are also pushing enterprises to think green and go green.
Vietnam is ready
From the 1900s, Vietnam implemented strategies and policies on poverty reduction, human
development and sustainable development. In 2004, it issued the Strategic Orientation on Sustainable
Development (Vietnam's Agenda 21). Since then, various strategies, plans and regulations were
issued and updated with a view to balance the economic interest and the negative externality on the
environment.
In recent years, the country’s commitment to SDGs has been jointly monitored together with Vietnam’s
Sustainable Development Indicators (including SDGs targets and 115 specific goals stipulated in
Decision 622/2017/QĐ-TTg).
In 2020, it passed the Law on Environmental Protection in which for the first time, the definition of
circular economy (CE) is stated and various policies and regulations on CE have been issued or
drafted since 2021. And in early June this year, Deputy Prime Minister Lê Minh Khái signed Decision
No. 687/QĐ-TTg approving a scheme developing the circular economy which is expected to contribute
to cementing the goal of reducing greenhouse gas emissions intensity within GDP by at least 15 per
cent by 2030 compared to 2014, towards the goal of net zero emissions by 2050.
Vietnamese Government also adopted the Green Growth Strategy 2021-30, with a vision to 2050 in
October 2021.
Immediately after COP26, Vietnam displayed its strong determination to implement its announced
commitments. It established the National Steering Committee, chaired by Prime Minister Phạm Minh
Chính to discuss and undertake the commitments in December 2021. It is currently completing the
relevant legal framework to fulfil these commitments in an urgent manner, including introducing the
Action Program expected this year.
On the business side, there have been certain movements in reality.
In agriculture, farmers are shifting from traditional farming model VAC (garden-pond-barn) to new
models to reduce the adverse impact on the environment and make use of raw materials more
efficiently such as VAC+biogas, VAC+forest and VAC+raising shrimp or planting rice.
In industrial production, both authorities and provinces have pledged to promote eco-friendly industrial
parks (IPs), especially the Nam Cầu Kiền eco-IP in Hải Phòng City built in 2008 according to
Japanese standards, which is a private initiative in which production communities have a symbiotic

relationship with efficiency in environmental and natural resources management.
Businesses are also investing more heavily in green business models such as “green circle” in dairy
farms of Vinamilk or TH Milk. More and more businesses are also developing according to the criteria
of the Corporate Sustainable Development Index (CSI) launched by the Vietnam Chamber of
Commerce and Industry (VCCI) and the Vietnam Business Council for Sustainable Development
(VBCSD) since 2016.
The CSI program qualifies and honors responsible businesses in three aspects including economy,
social responsibility and environment. According to VCCI, CSI-certified businesses are proved to be
more resilient, even during the COVID-19 pandemic. Sustainable development is considered a “green
passport” for enterprises to develop and integrate deeply into the world.
From the capital side, many financial institutions are taking bold steps to finance and facilitate green
and eco-friendly loan packages as an essential part of their sustainable investment and net-zero
pledges.
According to the State Bank of Vietnam (SBV), more than 31 financial institutions are involved in green
credit, with total credit of VNĐ290 trillion (US$12.5 billion) in 2020, mainly in fields of green agriculture
and renewable energy.
Vietnam has paid the price for growth (resource degradation and environmental pollution, especially in
big cities). The country is also one of the most affected by climate change. However, the transition to
green growth is a challenging process.
Vietnam’s action plan of the green growth strategy 2011-20 recorded only three out of 12 goals
achieved with low spillover impact.
The reasons include weak awareness of green development, institutional reform, education and media
campaigns at that time, and challenges from "bottom up" (competitiveness, management under new
business models, technology, investment) to “top down” (infrastructure, human resources, creativity
promotion). The conversion cost is not small.
In addition, national efforts and international cooperation are essential. Prime Minister Phạm Minh
Chính said in a meeting in May this year: "To achieve the national development goals, Vietnam cannot
go alone. If you want to go far, you must have friends."
In the world with many uncertainties and risks, enterprises need to learn how to manage risks and
shocks from geopolitical tensions, supply of input materials, financial-monetary instability and natural
disasters.
In a world which underscores connection and technological leaps, learning how to strengthen
competitiveness through connecting markets, partners in global value chains and global standards is
necessary. Learning to be continuously creative and successfully transform digitally (products, skills,
business model, and management) is key to success.
Despite challenges, with the strong political commitment and practical actions from the Government to
enterprises, Vietnam is expected to achieve their set goals in developing the green economy in the
future.
*Võ Trí Thành is a former vice-president of the Central Institute for Economic Management (CIEM)
and a member of the National Financial and Monetary Policy Advisory Council. The holder of a
doctorate in economics from the Australian National University, Thanh mainly undertakes research
and provides consultation on issues related to macroeconomic policies, trade liberalization and
international economic integration. Other areas of interest include institutional reforms and financial
systems.

Domestic dairy groups enlarge capacities to meet fresh demand
31 May 2022
After years of applying high technology and global standards towards green and sustainable
manufacturing trends, dairy businesses in Vietnam are showcasing their innovative, high-quality, and
safe products to enhance domestic sector performance.
The Vietnam Dairy 2022 International Exhibition, held from May 31 to June 4 at the Cultural Friendship
Palace in Hanoi, will provide a panorama of Vietnam’s dairy market in recent years, as well as the
expansion and contributions of dairy businesses to the economy and society.
Major domestic and international dairy brands will be present at the exhibition, including Vinamilk,
FrieslandCampina, Nestlé, Nutifood, Abbott, Vinasoy, Nutricare, Vitadairy, and Aiwado, along with
several large players from New Zealand, France, and the Czech Republic.
The exhibition will introduce different categories such as dairy products and ingredients, additives
used in the industry, production and packaging technologies, cow breeding techniques, milk products
standards, and technologies for environmental treatment, among others.
Last year the value of the dairy sector increased 1 per cent, AC Nielsen reported. The higher income
and health awareness of urban consumers has boosted the demand for high-quality product lines
such as organic products. Three major players in the industry – Vinamilk, FrieslandCampina, and TH
Group – have introduced organic dairy products to the market.
To address the rising demand for organic milk, domestic producers continue to increase their control
and exploitation of raw material areas.
Industry leaders such as Vinamilk recently debuted a Green Farm system in the central province of
Quang Ngai with a scale of 4,000 cows and will bring into operation a farm complex in Laos in 2023.
Smaller-sized companies like Moc Chau Milk also enlarged their current farming capacity and are
planning to develop a new ecological farm.
According to Euromonitor, yoghurt consumption dominated the sector last year thanks to public
awareness of its benefit in strengthening the immune system and resistance. The demand for liquid
milk remained stable since it is easy to consume and serves a crucial function in the nutritional support
of early children’s growth. The usage of condensed milk slightly increased, driven by the habit of using
the ingredient in making coffee and desserts.
The demand for powdered milk was meanwhile impacted by the decline in fertility rate and the
changing purchasing behaviour of parents towards liquid milk, as it is more affordable for a majority of
Vietnamese households.
The domestic dairy industry is confronting several challenges. The Vietnam Business Council for
Sustainable Development (VBCSD) highlighted that rearing cows requires a high level of expertise
and investment, but 95 per cent of the country’s dairy cows are raised by small and unskilled
households.
Farmers lack training on livestock methods and disease prevention. In addition, they are massively
impacted by other socioeconomic factors including livestock and cow feed price, as well as
productivity.
In addition, the VBCSD pointed out that a substantial amount of investment capital is required to
establish a proper dairy farming system. Due to the limitations of local technology, product costs, and
company earnings, companies in the dairy sector must import the materials and equipment from
abroad in order to meet market demand.
The dairy sector relies on imported milk powder rather than domestic products, and local herds are

unable to fulfil more than 20-30 per cent of national demand, resulting in supply and demand
mismatches in the sector. The changing price of imported dairy products also poses a risk of margin
compression.
Tran Quang Trung, chairman of the Vietnam Dairy Association (VDA) said, “Among the efforts in post-
pandemic economic development, the Vietnam Dairy exhibition is a crucial activity to strengthen
investment cooperation, thereby contributing to the recovery of Vietnam’s and the global economy.”
The exhibition, co-organized by the VDA along with Vietnam Exhibition and Advertising JSC, is a
periodic event that will enable Vietnamese-based dairy companies to exchange technologies and
methods for sustainable development.
Through the event, individual participants may acquire practical knowledge of milk and dairy product
consumption in order to make the best decisions for their families.
Industry: SP Group Pledges to Invest $537.76M in Sustainable Energy Solutions in Vietnam
13 May 2022
Vietnam News Brief Service
Singapore Power Group (SP Group) pledged to pour SGD750 trillion ($537.76 million) into sustainable
energy solutions in Vietnam by 2025 in a press conference in southern Ho Chi Minh City on May 11,
state media reported.
SP Group aims to develop solar power systems totaling 1.5 gigawatts (GW) for commercial and
industrial customers in cities, districts, and townships across Vietnam by 2025. Of the sum, SP
Group’s subsidiaries will strive to develop 1,000 megawatts (MW) by the year.
In order to assist Vietnam in reducing net emissions, SP Group’s CEO Stanley Huang suggested the
district cooling solution, which helped Singapore’s Marina Bay save 30% of energy and reduce 20,000
tons of carbon emissions annually.
Last year the company formed a joint venture with BCG Energy JSC, a subsidiary of Bamboo Capital
(HOSE: BCG). The joint venture announced a tie-up with Vietnam’s largest dairy company Vinamilk
(HOSE: NVM) to install a combined 25 MW of rooftop solar at nine factories and seven farms.
Vietnamese agriculture companies, farmers in hot water over rising costs

7 May 2022
Many agriculture companies and farmers are facing losses amid surging input and operation costs.
HAGL Agrico reported a losing streak in four consecutive quarters with losses of VND113 billion
($4.92 million) in the first quarter this year. It reported profits of VND7 billion in the same period last
year.
Meanwhile, the agricultural branch of steel giant Hoa Phat posted losses of VND56 billion against
profits of VND392 billion last year.
Dabaco Vietnam saw its profits shrink 98 percent to VND9 billion, the lowest in 10 recent quarters,
while dairy giant Vinamilk reported profits slipped 12 percent.
HAGL Agrico management attributed the losses to higher costs of fertilizer and raw materials, whose
prices have surged 130 percent since the beginning of this year.
Transportation further financially burdened the company, as sea freight costs skyrocketed by 237
percent to $2,650 per container. It also faced a shortage of refrigerated containers, while custom
clearance time prolonged from 12 to 35 days.

Higher input costs and supply shortage were also considered the main factors bringing Vinamilk’s
profits down.
Animal feed prices jumped 30-40 percent last year and are set to continue to rise this year; while
transportation costs rose 20 percent domestically and 500 percent globally last year, the company
said.
In the last three years, the company has seen its gross profit margin declining from 49 percent to 42.5
percent.
Dabaco's management said the industry is being hit hard by the Russia-Ukraine crisis, which disrupted
supply chains and raised prices of animal feed.
Higher input costs also drained many farmer's wallets.
Kim Thuy from southern Tra Vinh Province said she is struggling to feed 30 pigs, as feed prices have
been adjusted upward at least three times since the beginning of this year.
"Animal feed prices have surged faster than pig prices since the end of 2020. At the current costs, I
only break even if no problem occurs," she said.
Stock Market: Vietnam No.1 Dairy Firm VNM Appoints Former Parliament Official as Chairman
27 April 2022
Vietnam Dairy Products JSC (Vinamilk, HOSE: VNM), the country’s biggest dairy producer by market
capitalization, has appointed Mr. Nguyen Hanh Phuc, a former general secretary of the National
Assembly (NA), as the new chairman of the company in the 2022-2026 term.
Mr. Phuc will replace Ms. Le Thi Bang Tam, local media reported.
Mr. Phuc, 64, was general secretary of the legislature from January 2016 until last April. Earlier, he
was chairman of the Office of the NA and the chief of staff of the National Electoral Council.
Meanwhile, Ms. Mai Kieu Lien will stay on as the general director of VNM for the next five years.
Vietnam needs to plan the area to grow crops for animal feed
20 April 2022
Mr. Nguyen Nhu Cuong, Director of the Department of Crop Production, said: There have been many
types of research to select and develop many varieties of grass and forage plants such as terrestrial
herbaceous plants mixed varieties. Flood-tolerant herbs and groups of legumes used for grazing
cattle, multi-purpose plants.
Many models of growing livestock grass and biomass corn feed for dairy cows with high-economic
efficiency of Moc Chau Dairy Cow Breeding Joint Stock Company, TH Group, and Vinamilk Joint
Stock Company continue to be expanded in many locations.
However, due to the increasing number of dairy cows, the shortage of green forage is becoming more
urgent, especially in the dry season. Therefore, to proactively source forage for livestock, companies
have purchased thousands of tons of fresh corn plants each year to serve dairy cows.
In the long term, Mr. Nguyen Nhu Cuong said that it is necessary to plan the area for growing crops for
animal feed associated with the planning for livestock development, closely and synchronously from
the production stage to breeding techniques and farming techniques and processing.

Need to develop the market for agricultural by-products
According to Mr. Pham Van Toan, Deputy Director of the Vietnam Academy of Agricultural Sciences,
Vietnam has been forming insect rearing establishments from livestock waste and agricultural by-
products and producing insect powder as a source of protein for livestock production on a small and
spontaneous scale.
In 2019, the whole country exported over 291,000 tons of forage silage, earning over US$ 29 million in
revenue, to 22 countries, of which mainly to Korea, the Netherlands, and Japan... with 13 types of
goods such as silage corn stalks, silage bagasse, silage corn and soybeans, pineapple peels, silage
bagasse...
Therefore, maize biomass is a plant with a high potential for development to provide forage for
domestic livestock production and export, gradually replacing the current large amount of imported
refined feed if there are appropriate production organization models and technology.
At a meeting to discuss solutions to reduce input costs for animal feed on April 19, the Minister of
Agriculture and Rural Development Le Minh Hoan emphasized that feed costs account for about 60-
70% of livestock production costs, so it is necessary to find ways to reduce the cost of input materials.
It is necessary to form and develop a market for agricultural by-products (for people who do not need
to exchange and trade with those who have needs) and promote circular agriculture to take full
advantage of the environment products reducing dependence on foreign supplies.
In the New Rural program, we need to encourage the establishment of cooperatives to produce and
supply auxiliary products for the livestock and aquaculture sectors to take advantage of local
agricultural by-products, thereby contributing to the creation of new occupations, and jobs creation,
and income improvement for rural people.
Vietnam: Restructuring production chain and logistics of animal feed industry
12 April 2022
According to Deputy Minister of Agriculture and Rural Development Phung Duc Tien (pictured),
Vietnam's livestock industry has great potential and room for development. The project on developing
the feed processing industry that is being built will aim to solve the problem of animal feed in each
region associated with livestock production facilities. This is an important solution to improve the
competitiveness of the entire livestock industry in Vietnam.
What is an effective solution to "cool down" animal feed prices, providing income for farmers?
Over the past year, the price of industrial animal feed has increased, especially in early 2022. Animal
feed costs account for 65-70%, so this greatly affects the livestock industry.
To reduce pressure, farmers first need to make the most of available feed materials and agricultural
by-products.
After many years of research, the Institute of Livestock Production together with other units have
evaluated the nutritional value of feed ingredients in the localities; using mixed feed value analysis
software, giving a reasonable feed formula.
The research results have been applied to many subjects, such as raising pigs with foreign pigs,
indigenous pigs, poultry farming. In the future, this practice will continue to be replicated. By doing so,
the price of feed will be reduced by VND300 - 1,000/kg; livestock costs will be reduced by 5-7%.
In particular, the solution is to convert some inefficient land to growing feed materials. The Ministry of
Agriculture and Rural Development has directed De Heus Group to coordinate with the Central
Highlands provinces to establish cooperatives, focusing mainly on developing raw material areas for
cassava and maize to reduce the pressure of importing feed materials.

The Ministry of Agriculture and Rural Development is developing a project to develop the feed
processing industry. Could you share more details about the main content of this project?
Facing imports of a large number of feed materials, the project on developing the feed processing
industry that is being built will aim to solve the problem of animal feed in each region associated with
livestock production facilities.
Since the production chain from seed, feed, farming area and logistics with food processing factory
needs to be restructured. For example, the country currently has over 200 feed processing factories,
the design capacity and operation are very different. In the scheme for development of the feed
processing industry, it must be solved by regions associated with livestock production facilities, with a
step of restructuring, because technology is like a flow. If it is outdated, it will not meet the criteria.
Vietnam's livestock industry is considered to have a lot of room for development. What policies has the
Ministry of Agriculture and Rural Development (MARD) been making towards sustainable
development of the livestock industry, especially in building a safe breeding area to meet domestic as
well as export demand, Deputy Minister?
Developing the livestock industry in a sustainable and effective way, the Ministry of Agriculture and
Rural Development has submitted to the Prime Minister for approval of the "Strategy for livestock
development in the period of 2021 - 2030, with a vision to 2045". The specific objective of the Strategy
is the average growth rate of production value in the period 2021 - 2025 from 4-5%/year; the period
2026 - 2030 on average from 3-4%/year.
According to the orientation of livestock development to 2030 and a vision to 2045, Vietnam's livestock
production is a modern and economic industry and is industrialized in almost every stage from
production, processing, preservation to final results connecting product consumption markets, in which
the level and production capacity are among the leading countries in Southeast Asia. 100% of
livestock and poultry meat products are supplied from concentrated and industrial slaughterhouses
and over 70% of the volume of main livestock products are preliminarily processed and industrially
processed, including about 30% that are deeply processed.
Disease safety plays a very important role in ensuring food safety. Over the years, the Ministry of
Agriculture and Rural Development has implemented a clear action plan as well as orientation for the
next stages. In the past year, many disease-free breeding areas have also been built. Many
businesses have invested in closed livestock production chains such as Dabaco, CP, De Heus, TH,
Vinamilk. Enterprises have cooperated with localities to build disease-free zones.
Believing that, with a synchronous solution from breeders, feed, veterinary medicine, disease
prevention, model building and disease-free zones, the output and value of the livestock industry will
increase rapidly, ensuring sustainable development in the future.
Vinamilk struggles to maintain dominance as competitors catch up

28 March 2022
Dairy giant Vinamilk is struggling to claim a bigger share of the market as its growth potential
diminishes in the face of stiff competition from fast growing rivals.
Since achieving a new peak in 2018, the company’s ticker VNM has dropped by nearly 41 percent to
around VND76,000 ($3.32), and the dairy firm is no longer among the top 10 biggest caps on the Ho
Chi Minh Stock Exchange (HoSE).
The ticker, which has been sticking to VN-Index movements for years, started to break from the
benchmark in mid-2020, when it continued to fall despite a bullish market.
A survey of 4,000 investors by VnExpress showed that last year, VNM was their second biggest loss-
making stock behind HPG of steelmaker Hoa Phat Group.

One of the reasons was that the dairy giant had claimed the majority of the market at 60 percent and it
became more difficult to gain more, said analysts with Viet Capital Securities.
This has been reflected in Vinamilk’s declining earnings from 2017 to last year, with profit growth
diminishing for two years in the last five years, and only rising by single-digits in the remaining three
years.
This year, the company expects its profit to decline for the second year in a row.
Its competitors, meanwhile, have seen revenues surge.
TH true Milk saw its revenue surging nearly 49 percent to VND5.5 trillion between 2017 and 2020.
Another competitor, VPMilk, has seen revenue jump five times to VND150 billion in the same period.
Another challenge that Vinamilk faces is rising input and transportation costs.
Animal feed prices jumped 30-40 percent last year and are set to continue to rise this year; while
transportation costs rose 20 percent domestically and 500 percent globally last year, the company
said.
In the last three years, the company has seen its gross profit margin declining from 49 percent to 42.5
percent.
The dairy giant aims reach a profit of VND16 trillion in 2026, up 33 percent from 2022.
It plans to achieve these targets by stepping up research into new products and using new
technologies for sustainable livestock farming.
It also eyes new growth opportunities through mergers and acquisitions and new investments.
But analysts, however, remain conservative in their assessments.
Analysts with Vietcombank Securities said Vinamilk does not have much potential for growth in the
next two or three years despite having made moves to expand exports to other countries.
Vietnam’s largest dairy producer eyes 5-percent revenue growth in 2022

25 March 2022
Vinamilk, Vietnam’s largest dairy manufacturer, has set a target of the revenue growth of at least 5
percent to over 64 trillion VND (2.8 billion USD) in 2022, a rise from the 2.2 percent of last year.
From 2023, the rate is expected to rise to 7.7 percent a year, and the revenue will hit 86.2 trillion VND
in 2026.
Last year, the dairy producer earned a total of 61 trillion VND, marking the first time it exceeded the 60
trillion VND mark, but only equal to 98 percent of the set target.
Notably, the growth rate in the fourth quarter reached nearly 10 percent – the highest recorded in a
quarter in the past five years.
The domestic market continues contributing mostly to the company’s performance, with 84 percent of
revenue and 83.8 percent of profits. However, its revenue growth rate last year was quite low, at only
0.7 percent. Meanwhile, the foreign market maintained a higher rate, with 10.5 percent. The
company’s products are available in 57 countries and territories around the world

Stock Market: Vietnam Listed Dairy Firms See Profit Falling in 2022 amid High Material Prices
22 March 2022
Some Vietnamese listed dairy companies such as Vinamilk (HOSE: VNM), Quang Ngai Sugar
(UPCoM: QNS), and International Dairy Products (UPCoM: IDP) have forecast their profit to fall in
2022 due to higher prices of raw materials, according to the latest report by SSI Research under SSI
Securities Corp. (HOSE: SSI).
Among them, Vietnam Dairy Products JSC (Vinamilk, HOSE: VNM), the country’s biggest dairy
producer by market capitalization, has projected its pretax profit to slide 7% y/y of VND12 trillion
($517.24 million) this year, marking a decrease in its profit for the second year in a row and the lowest
in five years.
Meanwhile, its revenue is expected to rise 5% y/y to VND64.07 trillion in 2022.
Vietnamese dairy firm International Dairy Products JSC (UPCoM: IDP), the owner of two dairy brands
namely Ba Vi and Love’in Farm, targets a net profit of VND452 billion in 2022, down 45% from the
2021 performance, while its revenue is projected to reach VND5.5 trillion in the year, up 14% y/y.
Meanwhile, Moc Chau Dairy Cattle Breeding JSC (UPCoM: MCM), a member firm of VNM, targets a
net profit of VND343.5 billion on net revenue of VND3.12 trillion in the year, up 7.6% and 6.7% y/y,
respectively.
Quang Ngai Sugar JSC (UPCoM: QNS), a major soy milk producer, has set a net profit of VND1 trillion
on revenue of VND8 trillion in 2022, down 20% and up 8% y/y, respectively.
SSI Research forecast that input expenses of dairy firms, such as milk powder, animal feeds, and oil
will continue rising and are unlikely to have any adjustments in the first half of 2022.
Agriculture: Vietnam Vinamilk, Japan Sojitz to Commence $500M Cattle Farm Project in June
17 March 2022
Vietnam Dairy Products JSC (Vinamilk, HOSE: VNM), the country’s biggest dairy producer by market
capitalization, and Japan’s Sojitz Corporation will break the ground on a beef cattle complex project
costing $500 million in northern Vinh Phuc province in June, state media reported.
The project’s first phase is designed to have an annual capacity of raising 20,000 beef cattle.
At a working session with investors earlier this week, Vice Chairman of the provincial People’s
Committee Vu Chi Giang asked relevant agencies and units to quicken the project.
Agriculture: Vietnam’s Livestock Sector Overcomes Pandemic to Boost Exports in 2021

17 January 2022
Vietnam’s animal husbandry sector overcame difficulties triggered by the COVID-19 pandemic to
record annual growth in both export volume and value last year, according to the Department of
Animal Health, under the Ministry of Agriculture and Rural Development.
Since 2017 when Vietnamese processed chicken meat was licensed for export, the country has
shipped abroad over 9,000 tons of such product, said Mr. Nguyen Van Long, deputy head of the
department.

Last year, Vietnam exported more than 5,000 tons of frozen pork worth $20 million, up 19% y/y in
value. Notably, the country exported 100 tons of sterilized meat worth $600,000 to South Korea.
Besides, Vietnam shipped overseas 2,200 tons of poultry eggs to Singapore, Japan, South Korea,
Cambodia, Myanmar, and Laos. The country also exported 53,353 tons of honey worth over $100
million, up 6% y/y.
Recently, large firms including C.P. Vietnam, Vinamilk, TH Group, Dabaco, and Japfa Comfeed
Vietnam have boosted their investment in the livestock sector, which helped the country promote
exports of animal-poultry products.
However, Vietnam has so far had only 104 industrial-scale processing plants for eggs, meat, and dairy
products for export and domestic sales while the rest facilities are small-scaled.
In the time to come, the MARD will update firms on markets’ demand and barriers, support localities
on building disease-free livestock facilities, and boost international trade promotion activities,
especially in key markets such as the United States, Europe, China, and Japan.

COMPANY REPORT
Vinamilk (VNM)
1Q22 gross margin fell sharply, challenges ahead
Analyst Luong Ngoc Tuan Dung

May 16, 2022 dunglnt@kbsec.com.vn
In 1Q22, revenue increased slightly In 1Q22, Vinamilk’s (VNM) consolidated NPAT reached VND2,283 billion (-12%
by +5.2% YoY while NPAT YoY) on net revenue of VND13,878 billion (+5.2% YoY), fulfilling 23.1% and 21.3%
decreased by -12% YoY of the full-year plan for profit and revenue, respectively. VNM has witnessed
negative growth in consolidated NPAT for the fifth consecutive quarter.
VNM’s market share remains The BOD shared that VNM still maintained its market share in the first three
unchanged months of 2022 compared to the same period a year earlier. In 1Q22, yogurt and
liquid milk achieved impressive business results, contrary to powdered milk and
condensed milk.
Input prices tend to ease off but We believe VNM's net profit will be most affected in 2Q22 when using materials
remain higher than in 2021 VNM fixed purchase price in 1Q22. Thus, we revise VNM's gross profit margin for
2022 from 43% to over 41%.
We recommend BUYING VNM We revised our projection for VNM's business results to reflect the unexpected
shares with a target price of fluctuations in milk powder prices. Specifically, in 2022, we forecast VNM to post
VND84,100 VND9,484 billion (-10% YoY) in NPAT and VND62,781 billion (+3% YoY) in net
revenue. For 2023, those figures should be VND10,264 billion (+9.2% YoY) and
VND65,105 billion (+3.7% YoY). Based on DCF and P/E valuation methods with a
weight of 50-50, we lower VNM's 2022 target price from VND105,700/share to
VND84,100/share.
Buy maintain
Trading data Share price performance

Target price VND84,100
Free float 40% (%) 1M 3M 6M 12M
Upside/Downside 26.5% 3M avg trading value (VNDbn/USDmn) 214.6/9.5 Absolute -14 -18 -26 -27
Current price VND66,500 Foreign ownership 54.36% Relative 2 0 -10 -26
Market cap (VNDbn/USDbn) 139/6.1 Major shareholder SCIC (36%)
Forecast earnings & valuation

Relative vs VN Index (left)
FY-end 2020A 2021A 2022E 2023E
Net revenue (VNDbn) 59,636 60,919 62,781 65,105 VNM price (right)
(%) (VND)
Earnings/Loss (VNDbn) 13,539 12,728 11,375 12,431 0 100,000
NPAT (VNDbn) 11,236 10,633 9,384 10,260
-10
EPS (VND) 4,770 4,517 4,490 4,909 70,000
EPS growth (%) -12.9 -5.3 -1 9 -20
P/E (x) 22.8 19.1 14.8 13.5 40,000
-30
P/B (x) 6.8 5.0 3.7 3.7
ROE (%) 36 33 28 30 -40 10,000
05.21 08.21 11.21 02.22 05.22
Dividend yield (%) 45 35 40 40
Source: Bloomberg, KB Securities Vietnam

KB SECURITIES VIETNAM
Updated business performance
In 1Q22, revenue increased slightly In 1Q22, VNM's consolidated NPAT reached VND2,283 billion (-12% YoY) on
by +5.2% YoY while NPAT net revenue of VND13,878 billion (+5.2% YoY), fulfilling 23.1% and 21.3% of the
decreased by -12% YoY full-year plan for profit and revenue, respectively. VNM has witnessed negative
growth in consolidated NPAT for the fifth consecutive quarter.
Domestic revenue grew slightly VNM’s parent company recorded a slight increase in domestic revenue,
without significant improvement reaching VND10,234 billion (+4% YoY). During the first quarter, VNM upgraded
the packaging of some primary products. In addition, most of its distribution
channels have shown positive results. Specifically, distribution through modern
channels grew +30% YoY thanks to their increased popularity and rising
consumer demand; distribution through the GMSV store chain grew +25% YoY.
Besides, VNM opened 30 new stores in 1Q22, raising the total number of stores
to 620.
Meanwhile, Moc Chau Milk (MCM) recorded net revenue of VND675 billion
(+8.6% YoY). In 1Q22, MCM introduced two new pasteurized milk products with
eye-catching packaging.
Sales in foreign markets grew Overseas branches recorded revenue of VND1,081 billion (+28% YoY) as
mainly from foreign branches Driftwood sales continued growth with an increase of +40% YoY thanks to
stable demand from schools and hotels. In addition, Vietnam’s giant milk
company delivered export revenue of VND1,139 billion (flat YoY).
Gross profit margin was hit hard Consolidated gross profit margin in 1Q22 reached 40.5% (-310 ppts YoY). Gross
because of soaring milk powder margin continued to be heavily affected by continuously increased input
material prices over the past few months. The BOD of VNM shared that the
price of primary raw material (milk powder) used in 1Q22 was fixed at a high
level in 4Q21. Overall, the downward trend in profit margin is in line with our
forecast. However, the profit margin of 40.5% is much lower than our previous
forecast of 43% in 2022.
As a result, VNM had to optimize selling and G&A expenses to help improve its
net profit margin. In 1Q22, those expenses accounted for 21.7% of net revenue
(-73 bps YoY). However, due to the sharp decrease in gross profit margin, the
net margin plummeted to only 16.5% (-320 bps YoY).
2
Fig 1. VNM – Revenue & gross margin (VNDbn, %) Fig 2. MCM – Revenue & gross margin (VNDbn, %)
Revenue (left) Gross margin (right) Revenue (left) Gross margin (right)
VND bn VND bn
18,000 48.00% 900 40.0%
16,000 800 35.0%
14,000 700 30.0%
45.00%
12,000 600
25.0%
10,000 500
42.00% 20.0%
8,000 400
15.0%
6,000 300
4,000 39.00% 200 10.0%
2,000 100 5.0%
0 36.00% 0 0.0%
Source: Vinamilk, KB Securities Vietnam Source: Moc Chau Milk, KB Securities Vietnam
Fig 3. VNM – Gross margin across markets by quarter (%) Fig 4. VNM – Selling expense & G&A expense/revenue (%)
Domestic (excluded subsidiary) Selling expenses/revenue

Export
G&A expenses/revenue
Foreign subsidiaries
65% 30.0% 6.0%
25.0% 5.0%
55%
20.0% 4.0%
45%
15.0% 3.0%
35%
10.0% 2.0%
25% 5.0% 1.0%
15% 0.0% 0.0%
Source: Vinamilk, KB Securities Vietnam Source: Vinamilk, KB Securities Vietnam
Fig 5. VNM - Prices of key raw milk (Whole milk powder –WMP & skimmed milk powder - SMP)
SMP WMP
5,000
4,500
4,000
3,500
3,000
2,500
2,000
Source: Global Dairy Trade, KB Securities Vietnam
3
VNM’s market share remains The BOD shared that VNM still maintained its market share in the first three
unchanged months of 2022 compared to the same period a year earlier. In 1Q22, yogurt
and liquid milk achieved impressive business results, contrary to powdered milk
and condensed milk.
Specifically, according to VNM's statistics, the yogurt segment grew by +20%

YoY in revenue and gained market share from other brands. The gain mainly
came from: (1) VNM’s continuously launching plenty of new products and
improving packaging in 1Q22 (both yogurt and drinkable yogurt); and (2) the
increasing health awareness among customers, leading to the growing demand
for yogurt. Meanwhile, powdered milk and condensed milk had negative results
for: (1) the tendency to switch from powdered milk to liquid milk to save costs;
and (2) the fierce competitiveness of condensed milk compared to products
from Malaysia at lower prices.
Input material prices tend to In the latest auction week, the price of whole milk powder (WMP) was
decrease but remain higher than USD3,916/MT, a decrease of 17.6% compared to the highest level in 1Q22 at
2021 USD4,757/MT. The reason behind this is that China, the leading WMP import
country, has implemented the Zero-Covid policy. Therefore, in the short term,
the demand for WMP will decrease, leading to the selling prices no longer
increasing as strongly as before. However, we believe when China eases Covid
rules, the demand for WMP will surge, pushing WWP prices higher.
Meanwhile, skimmed milk powder (SMP) price was USD4,130/MT recently,

down more than 10% from the 1Q22 high of USD4,599/MT. The decline is
modest since Europe (the primary supplier) has been adversely affected by the
recent price escalation.
According to VNM's BOD, the price of raw materials has been fixed until at least
the end of 2Q22. Therefore, we believe VNM's net income will be most affected
in 2Q22 and rebound after 3Q22. Overall, for 2022, we adjust VNM's net profit
from 43% to over 41% with the following assumptions:
Table 1. VNM – Assumptions & forecast milk powder price

Average price in 2021 Average price in 2022
Whole milk powder (WMP) 3,641 4,141
% YoY 13.7%
Skimmed Milk Powder (SMP) 3,147 3,982
% YoY 26.5%
Source: KB Securities Vietnam
4
Table 2. VNM – Update 2022F business results

2022F 2022F
+/- % NOTES
(UPDATED) (PREVIOUS)
We revise up forecast revenue given increased domestic sales. Our new forecast for
Revenue 62,781 62,090 +1.1% revenue is lower than VNM's plan (nearly 64,000 billion), equivalent to an increase of 3%.
We revise up domestic sales, including an increase in average selling price (+5%) from
Domestic 52,149 51,458 +1.3% VNM.
Foreign 10,632 10,632 +0%
Gross margin fell short of our initial forecast due to an unexpected increase in key raw
Gross profit 25,856 26,735 -3.2% material prices. Net profit for 2022 of 41.18% comes from the assumption that key raw
material (milk powder) prices increase by 20% YoY.
Selling expense -13,996 -13,039
G&A expense -1,570 -1,552
Overall, our forecast for NPAT in 2022 decreased by 10.8% compared to the same period in
NPAT 9,484 11,013 -13.8% 2021.
5
Forecast business performance
2022F business results In 2022, we forecast VNM's NPAT of VND9,484 billion (-10% YoY) on net
revenue of VND62,781 billion (+3% YoY). For 2023, those figures should be
VND10,264 billion (+9.2% YoY) and VND65,105 billion (+3.7% YoY).
We recommend BUYING VNM Based on two valuation methods, DCF and P/E, with a weight of 50-50, we
shares with a target price of lower our forecast for VNM's target price from VND105,700/share to
VND84,100/share VND84,100/share. It reflects lower-than-expected business results of VNM
under the impact of surging input prices on profits.
For the DCF method, we use a beta of 0.76 (unchanged), a risk-free rate of 3%
(unchanged), and an E/A of 95% (up from 90%). Thus, the WACC in our model
is 10.25%.
Table 3. VNM – Target price according to valuation methods

Valuation method Forecast price Weight Weighted price
DCF 86,600 50% 43,300
P/E 81,683 50% 40,841
Target price 84,141
6
VNM – 2020A-2023E financials

Income statement Balance sheet
(VNDbn) 2020A 2021A 2022E 2023E (VNDbn) 2020A 2021A 2022E 2023E
Net sales 59,636 60,919 62,781 65,105 Total assets 48,432 53,332 53,408 56,253
Cost of sales (31,968) (34,641) (36,925) (37,612) Current assets 29,666 36,110 36,047 39,181
Gross Profit 27,669 26,278 25,856 27,493 Cash & equivalents 2,111 2,349 2,653 3,348
Financial income 1,581 1,215 1,416 1,472 ST investments 17,315 21,026 21,669 22,471
Financial expenses (309) (202) (332) (345) Accounts receivable 4,174 4,368 4,435 4,694
of which: interest expenses (144) (89) (206) (210) Inventory 4,953 6,820 5,729 7,054
Gain/(loss) from joint ventures 4 (45) 0 0 Other current assets 1,113 1,547 1,561 1,614
Selling expenses (13,447) (12,951) (13,996) (14,514) Long-term assets 18,767 17,222 17,361 17,072
General & admin expenses (1,958) (1,567) (1,570) (1,675) LT trade receivables 20 17 0 0
Operating profit/(loss) 13,539 12,728 11,375 12,431 Fixed assets 12,717 11,620 10,189 8,743
Net other income/(expenses) (21) 195 104 107 Investment properties 60 60 43 25
Pretax profit/(loss) 13,519 12,922 11,478 12,539 LT incomplete assets 794 835 1,863 2,929
Income tax (2,283) (2,290) (1,994) (2,178) LT investments 988 763 978 1,014
Net profit/(loss) 11,236 10,633 9,484 10,360 Goodwill 0 0 0 0
M inority interests 137 100 100 100 Other LT assets 4,187 3,928 4,288 4,361
Net profit after M I 11,099 10,532 9,384 10,260 Liabilities 14,785 17,482 16,285 18,359
Current liabilities 14,213 17,068 15,793 17,875
Operating ratios Trade accounts payable 3,199 4,214 3,062 4,844
(%) 2020A 2021A 2022E 2023E Advances from customers 16 4 8 8
Revenue growth 6% 2% 3% 4% ST borrowings 7,316 9,382 9,571 9,766
EBIT growth 6% -5% -10% 9% Special reserves 0 0 0 0
EBITDA growth 4% -4% -9% 8% Other current liabilities 3,681 3,468 3,153 3,258
NP after M I growth 5% -5% -11% 9% Long-term liabilities 573 414 492 483
Gross profit margin 46% 43% 41% 42% LT payables 0 0 0 0
EBITDA margin 26% 24% 21% 22% LT borrowings 167 76 49 32
EBIT margin 23% 21% 19% 20% Other LT liabilities 405 338 443 451
Pre-tax profit margin 23% 21% 19% 20% Shareholders' equity 31,297 33,083 34,356 35,127
Net profit margin 19% 17% 15% 16% Paid-in capital 20,900 20,900 20,900 20,900
Share premium 0 34 34 34
Cash flow Treasury stock (12) 0 0 0
(VNDbn) 2020A 2021A 2022E 2023E Undistributed earnings 6,910 7,594 7,917 7,650
Net profit 13,519 12,922 11,478 12,539 Reserve & others 3,489 4,555 5,505 6,544
Plus: depreciation & amort 2,817 2,367 1,784 1,802 M inority interests 2,350 2,767 2,767 2,767
Plus: investing (profit)/loss (301) (987) (987) (987) Total liabilities & equity 48,432 53,332 53,408 56,253
Change in working capital (1,174) (1,293) (93) 228
(Inc)/dec - receivables (715) (517) (67) (259) Key ratios
(Inc)/dec - inventory (270) (2,261) 1,091 (1,325) (x, %, VND) 2020A 2021A 2022E 2023E
(Inc)/dec - other curr assets 0 0 0 0 Valuations
Inc/(dec) - payables (213) 1,484 (1,152) 1,782 P/E 22.8 19.1 14.8 13.5
Inc/(dec) - advances 24 0 35 30 P/E diluted 22.8 19.1 14.8 13.5
Inc/(dec) - other curr liab 0 0 0 0 P/B 6.8 5.0 3.7 3.7
Other adj for operations 0 0 0 0 P/S 3.2 3.0 2.2 2.1
Operating cash flow 10,180 9,432 8,992 10,254 EV/EBITDA 12.8 16.6 18.2 16.8
ST investments 0 0 0 0 EV/EBIT 14.9 19.3 21.0 19.2
Capital expenditures (1,265) (1,531) (2,455) (2,530) EPS 4,770 4,517 4,490 4,909
Investment properties 0 0 0 0 DPS (annual, ordinary) 4,553 3,647 4,001 4,001
Investment in subsidiaries (0) (23) 0 0 Dividend payout ratio (%) 45% 35% 35% 35%
Other assets 0 0 0 0 Operating performance
Other adj for investments (3,537) (2,379) 1,972 1,156 ROE 36% 33% 28% 30%
Investing cash flow (4,802) (3,933) (483) (1,374) ROA 23% 21% 18% 19%
Issuance/(repayment) of debt 7,769 9,597 8,961 9,297 ROIC 29% 25% 22% 23%
ST debt (5,754) (7,551) (8,806) (9,123) Financial structure
Other liabilities 0 0 0 0 Total liab/equity 0.5 0.5 0.5 0.5
Issuance/(retirement) of equity 0 318 0 0 Current ratio (x) 2.1 2.1 2.3 2.2
Dividends paid (7,928) (7,621) (8,360) (8,360) Interest coverage (x) 95.0 146.5 56.6 60.7
Other adj for financing (14) 0 0 0 Activity ratios
Financing cash flow (5,927) (5,257) (8,204) (8,186) Asset turnover 1.4 1.2 1.2 1.2
Net increase in cash & equivalents (548) 241 305 695 Receivables turnover 13.5 14.3 14.3 14.3
Cash & equivalents - beginning 2,665 2,111 2,349 2,653 Inventory turnover 6.1 5.9 5.9 5.9
Cash & equivalents - ending 2,111 2,349 2,653 3,348 Payables turnover 9.3 9.8 9.8 9.8
Source: Vinamilk, KB Securities Vietnam
7
KB SECURITIES VIETNAM RESEARCH
Nguyen Xuan Binh

Head of Research Research Division
binhnx@kbsec.com.vn research@kbsec.com.vn
Equity Macro/Strategy
Duong Duc Hieu Tran Duc Anh

Head of Equity Research Head of Macro & Strategy
hieudd@kbsec.com.vn anhtd@kbsec.com.vn
Nguyen Anh Tung Le Hanh Quyen

Senior Analyst – Banks, Insurance & Securities Analyst – Macroeconomics & Banks
tungna@kbsec.com.vn quyenlh@kbsec.com.vn
Pham Hoang Bao Nga Thai Huu Cong

Senior Analyst – Real Estate, Construction & Materials Analyst – Strategy, Chemicals
ngaphb@kbsec.com.vn congth@kbsec.com.vn
Luong Ngoc Tuan Dung Tran Thi Phuong Anh

Analyst – Retails & Consumers Analyst – Strategy, Fishery & Textiles
dunglnt@kbsec.com.vn anhttp@kbsec.com.vn
Tieu Phan Thanh Quang

Analyst – Oil & Gas, Utilities
quangtpt@kbsec.com.vn
Support team
Nguyen Duc Huy Nguyen Cam Tho

Analyst – Banks, Insurance & Securities Assistant
huynd1@kbsec.com.vn thonc@kbsec.com.vn
Nguyen Thi Huong

Assistant
huongnt3@kbsec.com.vn
KB SECURITIES VIETNAM (KBSV)
Head Office:
Levels G, M, 2 & 7, Sky City Tower, 88 Lang Ha Street, Dong Da District, Hanoi, Vietnam
Tel: (+84) 24 7303 5333 - Fax: (+84) 24 3776 5928
Hanoi Branch:
Level 1, VP Building, 5 Dien Bien Phu, Ba Dinh District, Hanoi, Vietnam
Tel: (+84) 24 7305 3335 - Fax: (+84) 24 3822 3131
Ho Chi Minh Branch:

Level 2, TNR Tower Nguyen Cong Tru, 180-192 Nguyen Cong Tru Street, District 1, HCMC, Vietnam
Tel: (+84) 28 7303 5333 - Fax: (+84) 28 3914 1969
Saigon Branch:
Level 1, Saigon Trade Center, 37 Ton Duc Thang, Ben Nghe Ward, District 1, HCMC, Vietnam
Tel: (+84) 28 7306 3338 - Fax: (+84) 28 3910 1611
CONTACT INFORMATION
Institutional Client Center: (+84) 28 7303 5333 – Ext: 2656
Private Customer Care Center: (+84) 24 7303 5333 – Ext: 2276
Email: ccc@kbsec.com.vn
Website: www.kbsec.com.vn
Investment ratings & definitions
Investment Ratings for Stocks

(based on expectations for absolute price gains over the next 6 months)
Buy: Hold: Sell: Opinions in this report reflect the professional judgment of the research analyst(s) as of
+15% or more +15% to -15% -15% or more the date hereof and are based on information and data obtained from sources that KBSV
considers reliable. KBSV makes no representation that the information and data are
accurate or complete and the views presented in this report are subject to change without
Investment Ratings for Sectors
prior notification. Clients should independently consider their own particular
(based on expectations for absolute price gains over the next 6 months)
circumstances and objectives and are solely responsible for their investment decisions
Positive: Neutral: Negative:
and we shall not have liability for investments or results thereof. These materials are the
Outperform the market Perform in line with the market Underperform the market
copyright of KBSV and may not be reproduced, redistributed or modified without the prior
written consent of KBSV. Comments and views in this report are of a general nature and
intended for reference only and not authorized for use for any other purpose.

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VIETNAM DAIRY PRODUCTS JSC

All content © Vietnam Dairy Products JSC 2

Diversified Portfolio Leadership

Unique End-to-end Value Chain

Strong Financial Position

All content © Vietnam Dairy Products JSC 3

Domestic Subsidiaries & Overseas Subsidiaries &

Vietnam Dairy Cow One Member

APIS Joint Stock Company (20%) Lao Jagro Development Xiengkhouang

All content © Vietnam Dairy Products JSC 6

Favorable Macro Domestic End-to-End Solid Proven Record of

All content © Vietnam Dairy Products JSC 8

7.0 6.7 7.0 86%

2019 2020 2021F 2022F

Philippines Vietnam Malaysia Indonesia Thailand Singapore

All content © Vietnam Dairy Products JSC 9

Malaysia Vietnam Thailand Indonesia South Korea China

All content © Vietnam Dairy Products JSC 10

Favorable Macro Domestic End-to-End Solid Proven Record of

All content © Vietnam Dairy Products JSC 11

UNRIVALLED LEADER IN THE DAIRY CATEGORY IN VIETNAM

Liquid Milk Yoghurt Condensed Milk Formula Milk

Fruit Juice &

All content © Vietnam Dairy Products JSC 12

Refresh the portfolio annually with 15-20 new products

All content © Vietnam Dairy Products JSC 13

All content © Vietnam Dairy Products JSC 14

Favorable Macro Domestic End-to-End Solid Proven Record of

All content © Vietnam Dairy Products JSC 15

Vinamilk E-shop giacmosuaviet.com

Online Shopping app – “Giac Mo Sua Viet” International Operation

IMPORTED MILK POWDER RECONSTITUTED & POWDER PRODUCTS

Whole Milk Skim Milk Anhydrous Milk

All content © Vietnam Dairy Products JSC 17

• 5,000 hectare land bank offering

All content © Vietnam Dairy Products JSC 18

WATER COW WELFARE

MCM’s Positive Sales MCM’s Improved NPAT MCM’s Corporate

2019 2020 2019 2020

All content © Vietnam Dairy Products JSC 20

4,000 cow heads

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• Inventory and spoilage loss

All content © Vietnam Dairy Products JSC 22

100% AUTOMATED PRODUCTION

All content © Vietnam Dairy Products JSC 24

13.17 13.63 13.43

All content © Vietnam Dairy Products JSC 26

All content © Vietnam Dairy Products JSC 27

All content © Vietnam Dairy Products JSC 28

All content © Vietnam Dairy Products JSC 29

Available Resources in Vietnam:

All content © Vietnam Dairy Products JSC 30

Favorable Macro Domestic End-to-End Solid Proven Record of

All content © Vietnam Dairy Products JSC 31

Mr. Nguyen Quang Tri

Favorable Macro Domestic End-to-End Solid Proven Record of

All content © Vietnam Dairy Products JSC 33

60,919 43.1 30.6

10,633 4,517 20.9

All content © Vietnam Dairy Products JSC 35

VIETNAM DAIRY PRODUCTS JSC (VNM) ─ UPDATE

02-21 04-21 06-21 08-21 10-21 12-21