HAX - Big challenges still lie ahead
Q2-FY25: Performance was below expectations due to significant MBZ market share decline and narrowed MG margin during large-scale dealership expansion• Net revenue reached VND 1,029 bn (-8.3% YoY), notably below projections, driven entirely by MBZ segment decline (-45.0% YoY) – a dual impact from weakened luxury car market share in Vietnam and HAX’s own MBZ distribution share. A bright spot from MG (+49.0% YoY) due to robust dealership expansion (8/15 new dealerships in H1-2025), though insufficient to offset MBZ’s downturn.
• NPAT-MI recorded a loss of VND 4.4 bn (first since Covid-19, worse than expected VND 20-24 bn gain). Caused by reduced MBZ volume and net margin, HAX opened 7/17 nationwide MG dealerships, applied price cuts (gross margin down 218bps YoY), increased advertising and discount costs, yet sales fell short of targets. Fixed costs (depreciation, salaries) rose due to expansion, pressuring MG margins.
FY25 Outlook: A highly challenging year with dark spots from broader automotive market shifts, significant MBZ weakness, and underperforming MG post-expansion
• Vietnam’s auto market remains subdued due to major bottlenecks: “lunar month – sales trough,” “no annual registration fee reduction policy,” and “hesitancy to buy gasoline cars amid new electric vehicle regulations.” HAX faces declining demand for luxury MBZ and heightened competition in the mass market (gas/electric) from VinFast for MG.
• HAX prioritizes MG development to replace declining MBZ share. Opening 7/17 MG dealerships in H1-2025 creates short-term revenue/profit instability. From Q3-2025, HAX expects improved per-dealership MG revenue and optimized discount/advertising costs
• Accordingly, we forecast HAX’s Q3-2025 performance with net revenue at VND 1,160 bn (-24.6% YoY), NPAT-MI at VND 6 bn (-90.8% YoY). The “Vo Van Kiet land deal” variable (minimum price VND 180 mn/m²) failed to materialize as expected, erasing hopes of a mid-year profit surge.
• We project HAX’s 2025 net revenue at VND 6,295 bn (+14.2% YoY), NPAT-MI/EPS at VND 94 bn (-24.8% YoY) and 875 VND.
• We forecast HAX’s 2025 net revenue at VND 4,448 bn (-19.3% YoY), with NPAT-MI and EPS reaching VND 33 bn (-73.5% YoY) and VND 308, respectively.
Outlook & Recommendation
In a sluggish auto sector with declining MBZ share, HAX views MG as a new growth driver. However, diminishing MG profitability slows 2025 net profit growth. The unsuccessful Vo Van Kiet land transfer adds pressure to 2025 performance.
We apply a long-term DCF valuation for HAX, targeting a share price of VND 14,000 next year, implying a 2025 forward PE of 47.3x. Based on the closing price of 08/22/2025, we recommend a NEUTRAL rating for HAX.
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