Vinamilk (HOSE: VNM) | 2Q26 Update, ADD - Upside +15.0%

Premiumization And Overseas Expansion Underpin Earnings Growth

VNM 2Q26 Perfomance

VNM delivered a strong 2Q26, with earnings materially outpacing revenue growth as the domestic recovery gained traction. Revenue increased 16.8% YoY to VND18.9tn, driven primarily by 13–14% volume growth rather than pricing, while a richer premium mix and operating leverage lifted GPM by 170bps YoY to 43.5%. Domestic GPM improved more significantly to 44.2% (+280bps YoY), reinforcing our view that the recovery is translating into better earnings quality.

1H26 results tracked ahead of our expectations, with revenue reaching VND3,167bn (+28.0% YoY) and NPAT-MI reached VND 5,596bn (+38.4% YoY), achieving 53%/58% of our FY26E revenue and earnings forecasts. We expect revenue momentum to remain positive in 2H26 on seasonal demand but see less scope for further margin expansion as milk powder, production and logistics costs rise while management maintains pricing. As such, we expect earnings growth to normalize in 2H26, with volume and product mix becoming increasingly important drivers of profitability.

Earnings Forecast

We raised our FY26E revenue and NPAT-MI forecasts to VND 71,708bn (+12.7% YoY) and VND 10,578bn (+12.4% YoY), respectively, reflecting stronger-than-expected 1H26 execution and a doubling of revenue from Angkor Milk. For FY27E, we expect earnings growth to normalize, forecasting revenue of VND 74,427bn (+3.8% YoY) and NPAT-MI of VND 10,983bn (+3.8% YoY).

Target Price and Rating

Our new TP arrived at VND 71,300/share (from VND 72,100/share), implying 15.0% upside from the closing price of VND 62,000/ share on 7 August 2026. We therefore downgrade our BUY to ADD recommendation. At the current price, VNM trades at 11.8 TTM P/E and 10.7x FY26E P/E. VNM also offers an attractive dividend profile, with total FY25 cash dividend at VND 4,350/share, ~6.7% dividend yield.