NLG – Sales to recover, profit to increase in 4Q
- In the 2Q2023, NLG recorded revenue of VND 953bn (USD 39.2MN, -23%YoY), due to the handover of villas in the Aqua sub-division (66 high-value villas, with a price range from VND 10-20 billion/unit). The gross profit margin (GPM) was maintained at 59% owing to the contribution of high-end projects. Gross profit reached VND 561bn (or USD 23.1mn, +329%YoY, +11%QoQ). With VND 37bn income from associates, NLG had 2Q23 net profit-after-tax-and-minority-interest (NPAT-MI) of VND 121bn (+1,629%QoQ, +9%YoY). To sum up, in 1H23, the company recorded NPAT-MI of VND 128bn (USD 5.3mn), met ~22% of our full-year forecast.
- In 3Q, we see recovering housing demand in HCMC and neighboring provinces. Particularly, in September, the block AK-10 of Akari recognized pre-sale value of VND 700bn (met ~33% of our 2H23 forecast for Akari project). In addition, from our observation, we see that villas in the Park Village sub-division have started recorded transactions. As a result, we maintain our expectations that NLG can have 2H23 pre-sale value of VND 5,817bn (USD 239 mn) and total 2023 pre-sale value of VND 6,684bn (USD 275mn, 71% of the company's plan).
- In 2H23, we expect the company to recognize revenue of VND 2,776bn (USD 114.2mn, +11%YoY) and NPAT-MI of VND 445bn (USD 18.3mn, equivalent to 2H22 NPAT-MI). FY2023, revenue and NPAT-MI will be VND 3,964bn and VND 573bn, fulfilling 98% of the company’s FY2023 guidance. EPS will be VND 1,434. The risk of our estimation would come from lacking the Paragon Dai Phuoc divestment income if the legal processing takes longer time than our expectation.
- Using the RNAV method, we have a target price of VND 37,500/share (upside +14.5%, including cash dividend of VND 500/share), equivalent to an ACCUMULATE recommendation
Nam Long Investment Corporation is a Vietnam-based company engaged in the real estate operations and development industry. The Company mainly operates in five segments. The sales of projects and apartments segment refers to the development of land and urban infrastructures, as well as the development of apartment buildings and villas. The construction segment involves the construction of urban infrastructures, residential zones and the construction of Nam Long-branded houses. The leasing of investment properties segment relates to the leasing of office buildings and commercial centers owned by the Company. The service rendering segment comprises real estate brokerage services. The other activities segment refer to other activities carried out by the Company's subsidiaries and affiliate. The Company has nine subsidiaries and one affiliate.
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