We are initiating coverage on Everpia Vietnam JSC (OTC: EVE), Vietnam’s numberone- market-share bedding company, with a BUY rating. Our DCF-based valuation gives a one-year price target of VND63,000, 26% higher than the current indicative OTC price of VND50,000.

The core bedding business - 77% (FY09) of the company’s sales - trades under the brand name of Everon, which has become a well-recognized brand name in the minds of Vietnamese consumers, supported by an extensive retail distribution network. Its new premium brand, Artemis, will be the focus of attack for high-end sales. As such, this stock should be viewed as a high-quality branded consumer play in one of the very best markets in the world with respect to middle class consumer growth outlook.

Its other business, padding for jackets – 17% of sales in FY09, down from 36% in FY06 – has a number two market share of 20% of a $25m market; the other top four players have 68% of the market. This business is less exciting, although growth here appears to be improving.