T&G: Outlook clouded by tariff uncertainties

T&G: Outlook clouded by tariff uncertainties

Vietnam's T&G exports rose a modest 1.8% y/y in 7M26, reflecting a stillchallenging demand environment, but remained broadly in line with our FY26F of 2.5% export growth. The sector outlook looks clouded by US tariff uncertainties and intensifying scrutiny of Vietnam's trade practices. The bigger risk lies beyond the current 12.5% so-called forced-labor tariff – namely, US investigations into overcapacity and intellectual property (IP) – while preliminary moves re. transshipment also concern. We cut our FY26-28 earnings forecasts for TCM (impacted by margin contraction in 2Q26) but only tweak those for TNG. Following this, we reiterate our Add on TNG with 17% upside to our new TP and downgrade TCM to Reduce (from Hold).