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AGG – A company with potential land bank in HCMC

• In 2Q2023, AGG recorded revenue of VND 1,676 bn (or USD 70.7mn, -38%YoY), due to the handover of ~650 apartments in the Westgate project (the apartment project in Binh Chanh district, HCMC). The gross profit reached VND 389bn (USD 16.4mn, -27%YoY), and the operating profit VND 122bn (-50% YoY, operating margin decreased to 7%). Owing to lower financial expenses and income from a penalty payment, AGG had net profit-after-tax-and-minority-interest (NPAT-MI) of VND 133 bn (-22%YoY) in that quarter. The 1H23 NPAT-MI reached VND 81bn (-33%YoY), which met ~81% of the business plan.
• For FY2023, the company plans total revenue to reach VND 3,000bn (USD 126.6mn, -52%YoY), mainly coming from the handover of ~1000 units of the Westgate, and the NPAT-MI of VND 100bn (USD 4.2mn, +427%YoY). We expect that the company can meet its 2023 business plan, supported by: 1/The 04 blocks of the Westgate have been completed, including the landscape (swimming pool, central park), and 2/ The company fulfilled 81% of its 2023 business plan after the first six months of the year.
• In term of sales plan, the company will launch the Gio project - a mid-end apartment project in Binh Duong - with total units of 3,000 and price range of VND 1.8-2.5bn/unit. Per the company, it has already got the construction permit and sales will commence in 4Q23. Given that the offered price is affordable and the project’s location is favorable, we expect that the market can absorb ~40% of total units, with expected 2023 pre-sale value of VND 2,640bn.
• AGG is trading at a PBR of 1.6x, which is equivalent to peer’s PBR of 1.7x and its 3Y average PBR of 1.8x. The stock price has begun to priced-in the potential from their current projects (the Westgate, the Standard, the Gio). The legal status completion of Binh Chanh, however, can be the potential up-side factor asset values.