■ VNM pre-announced its FY16 results. The company has made an initial estimate that revenues rose ~15% in FY16, and net profits grew ~20% yoy.
■ Advertising and promotion expenses grew 25% yoy, so net profits came in 9% below our forecast, but VNM’s liquid milk market share increased by 3%pts to 55%.
■ The company’s gross margin narrowed from 42.3% in 9M16 to 41.7% in 4Q16.
■ We lower our FY17-18 EPS forecasts by 8-10% and cut our target price by 7% but maintain our Hold rating. Our target price is based on 22x FY17 P/E.