Vietnam Airlines (HOSE: HVN) | Q4 2025 Update, BUY– 1Y Upside +30.8%

Valuation Turns Attractive As Earnings Reset And Balance Sheet Normalizes

HVN reported a softer Q4 2025, with revenue of VND 24,583 bn (+17.5% YoY, +2.1% QoQ); however, earnings momentum reversed as jet fuel prices rose to USD 2.32/gallon in November (+5.4% MoM), compressing Q4 2025 gross margin (GPM) to 9.5% (vs. 12.5% in Q3 2025).

For FY2025, HVN’s topline expansion masked weaker earnings conversion. Consolidated revenue reached VND 121,430 bn (+13.6% YoY; 101.9% of our projection), supported by 25.6 mn passengers (+10.8% YoY) and 156,300 flights operated (+9.8% YoY). While gross profit increased to VND 18,072 bn (+30.0% YoY), GPM of 14.9% fell short of expectations due to fuel cost pressure in Q4 2025. Consequently, FY2025 NPAT-MI arrived at VND 7,302 bn, reaching only 84.3% of our projection, reflecting weaker margin realization despite improved operating scale.

Air transportation remained the core revenue engine in FY2025, generating VND 95,374 bn (+14.5% YoY), supported by international traffic recovery, notably from China and South Korea. Ancillary revenue reached VND 3,771 bn (+14.5% YoY), exceeding forecasts by 25.7%, driven by higher ancillary revenue per passenger. Aviation trading revenue totaled VND 24,583 bn (+17.5% YoY), broadly in line with expectations, as jet fuel demand increase offset lower average jet fuel prices.

We raise our 2026 revenue forecast to VND 131,137 bn (+1.6% vs. our prior estimate), underpinned by sustained international passenger growth, improving load factors, and expectations of a firmer fare environment as industry capacity expands. The commencement of operations at Long Thanh International Airport is also expected to support medium-term traffic growth and network efficiency.

However, we lower our 2026 NPAT-MI forecast to VND 9,183 bn (–22.7% vs. our previous estimate), reflecting intensifying competition in the full-service carrier segment, particularly on key domestic trunk routes. The entry of new competitors, alongside aggressive capacity deployment by incumbents, is likely to weigh on yield discipline and margin expansion. In addition, HVN remains exposed to jet fuel price volatility and limited hedging coverage, which could continue to pressure near-term profitability.

HVN’s share price has declined 30.9% from its September 2025 peak, bringing the stock to a more attractive valuation level as the company has fully exited its negative equity position and entered a new growth phase. Accordingly, we maintain our BUY recommendation with a 12-month target price of VND 34,150/share, implying an upside of 30.8% from the closing price of VND 26,100/share as of 9 February 2026.