Phuoc Hoa Rubber (HOSE: PHR) | 2Q26 Update, BUY - Upside +24.1%

Strong Earnings Growth Supported by Higher ASP and Compensation Income

PHR 2Q26 Performance

PHR reported 2Q26 revenue of VND406bn (+10.4% YoY, -13.2% QoQ), with GPM expanding sharply to 34.2% from 26.7% in 2Q25. The increase in rubber prices, supported by higher oil prices amid geopolitical tensions, lifted ASP contributing to margin expansion. 2Q26 NPAT-MI reached VND364bn (+303.3% YoY, +30.4% QoQ), supported by GPM expansion and VND263bn of VSIP compensation recognized in 2Q26.

For 1H26, revenue reached VND875bn (+28.7% YoY), while NPAT-MI rose 244.9% YoY to VND643bn with NPAT-MI from core business reached VND247bn (+36.6% YoY). 1H26 revenue and NPAT-MI achieved 38.4%/84.4% of management’s guidance and 43.0%/65.0% of our previous forecasts.

Land compensation remains the key FY26 earnings driver

VSIP3 remains PHR’s largest FY26E earnings catalyst, with total compensation of ~VND3.26tn, or ~VND4.7bn/ha. PHR has received ~VND2.21tn to date, with the remaining ~VND1.05tn due by January 2027 and subject to late-payment interest. Importantly, PHR will receive full land compensation rather than retain its previous 20% stake in VSIP3, accelerating cash monetization from the project.

Further upside comes from the THADICO agreement, which implies ~VND1.44tn of compensation, including VND500bn expected in 2026. Combined with VSIP3 recognition, these proceeds provide strong earnings visibility and underpin management’s expectation for FY26 PBT to exceed VND2.0tn, while materially strengthening PHR’s net cash position.

Earnings Forecast

We maintain our FY26–28E revenue forecasts but raise NPAT-MI to VND1,785bn/VND1,739bn/VND841bn, primarily reflecting higher VSIP3 and THADICO compensation income and stronger rubber margins on favorable ASPs. We now assume VND1,050bn/VND1,052bn of VSIP3 compensation in FY26/27E and VND500bn annually from THADICO.

Target Price and Rating

We raise our risk-free rate to 8.0% (from 5.0%), reducing our rubber DCF valuation by 10.7%. However, faster VSIP3 cash collection largely offsets the higher discount rate, leaving our SOTP broadly unchanged. Importantly, the compensation proceeds should materially strengthen PHR's net cash position; absent significant new investment or higher distributions, we would expect the additional liquidity to generate incremental interest income beyond FY26.

We raise our 12-month TP modestly to VND73,200/share (from VND72,700) and upgrade our rating to BUY from ADD, implying 24.1% upside from VND59,000. Beyond valuation, we see potential for higher shareholder distributions as proceeds are collected and the balance sheet strengthens. the cash retained should support higher financial income until deploying to new projects, providing an additional buffer to earnings as one-off compensation gains normalize.