LHG – Expect to see earnings boost in 2025
- In 3Q2022, the total revenue reached VND 178 billion or USD 7.4 million (+242% YoY) and NPAT was VND 82 billion or USD 3.4 million (+310%YoY). The robust growth was due to low base effect of 3Q2021. In 9M2022, LHG’s revenue declined 27% YoY to VND 525bn (~USD21.8 million) and its NPAT plunged 37% YoY to VND172bn (~USD 7.1 million)
- From LHG’s EGM, we learned that the company (1) may not meet its 2022 revenue plan; (2) considers choosing AFC or A&C to audit its 2022 FS; and (3) LHG will see earnings boost in 2025 as new projects including Long Hau 3 phase 2, An Dinh and Long Hau 3 urban project can be commercialized.
- We continue to maintain a positive long-term outlook for LHG as (1) ready-to-lease area (~30 ha) at Long Hau 3 phase 1 is enough to secure LHG’s earnings performance until 2025, (2) short-term benefit from the deep depreciate of the Dong given its quoting price in USD, (3) ~10 hectares leasing facilities bring stable income source for LHG.
- We revise down our target price to VND 36,000/share due to (1) factoring liquidity risk by taking a discount by 20% of NAV as LHG being limited trading time; (2) eliminating the last 20 hectares that had yet been cleared in Long Hau 3 phase 1; and (3) temporarily eliminating An Dinh and LH 3.2 until the investment policies get approvals. Adding an annual cash dividend of VND 1,700 per share, the total expected return will be +98.4% (compared to the closing price of 11/22/2022).
Long Hau Corporation is a Vietnam-based company engaged in the real estate industry. It is involved in the development and construction of infrastructures for industrial zones and residential areas. The Company invests in the development of Long Hau Industrial Zone in Long An Province, as well as provides fresh water and waste water treatment services for plants inside Long Hau Industrial Zone. Other activities include the trading of construction materials, along with the offering of land clearing services, interior decorating services and real estate brokerage services. The Company has four affiliates.
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