HDG – Energy to face headwinds, real estate segment to lack new projects.
- In 1Q23, HDG recorded revenue of VND 956bn (USD 40.4mn, +40%YoY) and gross profit reached VND 575bn (or USD 24.3mn, +24%YoY, -6%QoQ). The gross profit margin (GPM) reached 60% owing to the high GPM of the energy segment (1Q23 gross profit of VND 398bn with GPM of 73%).
- For the residential segment, HDG continues to handover villas at the Ha Do Charm – phase 2 project, with expected 2023 revenue of VND 750bn (USD 31.7mn, -32%YoY). At the same time, it plans to open the third phase of sales in late 3Q2023. Given the high selling price (VND 15-25bn/unit), however, we expect that the market can absorb ~30% of total units, equivalent to an expected pre-sale value of VND 570bn.
- For the energy segment, the 2Q23 power output was 197mn Kwh (-45%QoQ, -36.5%YoY), as the hydrological conditions were negatively affected by the dry season and the El Nino phenomenon. With the high probability that El Nino phenomenon can last until 1Q24, we expect the 2023 output of power plants will reach 1,517mn Kwh (-8%YoY), and revenue of VND 1,943bn (USD 82mn, -8%YoY).
- We estimate 2023 NPAT of VND 1,112bn (-18%YoY, 115% of the company’s business plan). The 2023 EPS will be VND 3,138. Using the SoTP (Sum-of-the-parts) method, we maintain the target price of VND28,600/share (Upside -5%), equivalent to a NEUTRAL recommendation for Hado Group Jsc. We like the company’s asset with power plants and high-potential residential land bank. However, the company’s 2023 business results could poor perform due to the weaken of hydropower and residential segments as mentioned, we recommend investors to wait for further discount on the stock price to accumulate for long-term investment.
Ha Do Group Joint Stock Company (HADOCO), formerly Ha Do Joint Stock Company, is a Vietnam-based company engaged in real estate operations. It is also involved in the development and construction of civil and industrial structures, including office and apartment buildings, hydropower plants, power transmission lines and infrastructures. The Company is engaged in the provision of architectural, engineering, interior decorating and installation services, along with real estate brokerage services. In addition, the Company provides ecotourism services and construction equipment repair services. Other activities include hotel and restaurant operations, as well as hydropower generation and trading.
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