Company Insight

Update BUY rating, target price at 79,600 VND

Vietnam Dairy Products JSC (Vinamilk, HOSE: VNM) is the leading dairy enterprise in Vietnam, boasting the country's largest distribution network and dairy herd. VNM holds the top market share across most segments, maintains a healthy asset structure, and consistently pays dividends. The company recently announced its Q2/2026 financial results, showing strong year-on-year growth in both revenue and profit, driven by contributions from both domestic and international markets. Based on FCFF and P/E valuation methods, we have updated our valuation and issued a BUY recommendation with a target price of VND 79,600, implying an expected return of 28%. We believe the current trailing P/E (TTM) of around 13x makes VNM an attractive buy, given its consistent dividend payouts, with an expected dividend yield of 7% based on the current share price.

Q2/2026 business results update

In Q2/2026, VNM recorded net revenue of VND 18,847 billion (+16.7% QoQ, +12.5% YoY), with both domestic and overseas markets contributing significantly to this growth. Domestic revenue reached VND 14,516 billion (+20.2% QoQ, +6.5% YoY), accounting for 77% of total revenue and showing strong year-on-year growth. International revenue reached VND 4,331 billion (+6.4% QoQ, +39.2% YoY), representing 23% of net revenue and hitting a new record high. However, the gross profit margin for the international market contracted by 2.2 percentage points (pp) YoY, reflecting increased logistics and raw material costs driven by US-Iran tensions.

The overall gross profit margin expanded in Q2/2026 to 43.5% (+1.7 pp YoY), aided by lower raw material costs compared to the same period last year, thanks to prior stockpiling. Selling, General, and Administrative (SG&A) expenses totaled VND 4,625 billion (+10.8% YoY) for the quarter, as VNM ramped up advertising and promotional activities to mark its 50th anniversary. Over the six-month period, SG&A spending rose by approximately 13% YoY; however, the SG&A/revenue ratio stood at 25.2%, down 1 pp compared to the same period last year. Net profit reached VND 3,184 billion in Q2 (+27.9% YoY), bringing the six-month total to VND 5,642 billion (+38.4% YoY).