TCM – Update – 20180807

• We expect TCM’s 2018 core earnings to rise by 18.3% yoy with a change in product mix to focus more on garment manufacturing which has the highest margin in TCM’s portfolio. We therefore expect gross margins to expand by 130bp to 17.0% in 2018.
• We maintain an ADD rating but reduce our target price by 25.5% to VND22,500 based on a lower target P/E of 6.6x, equal to the peer average TTM P/E, and revised EPS of VND3,394 (-6.4% vs previous forecast). TCM looks attractive right now as it is trading at a TTM P/E of just 5.2x, a 21.2% discount to the peer average.

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