Earnings Report /
Vietnam

Nam Long Investment: Q1 20 – Awaiting stake transfer of waterfront project

  • Net sales at VND416bn (+25% yoy) and NPATMI at VND 110bn (24% yoy), fulfilling 27% and 13% of the year’s target

  • NLG is approaching the final stage of negotiations on a 35% stake transfer in the waterfront project

  • We set a target price for NLG at VND31,500; we have a Buy on the stock with a total estimated return of 36%

Duong Lai
Duong Lai

Real Estate, Building Materials

Follow
Rong Viet
28 May 2020
Published byRong Viet

Q1 20 – Ongoing deliveries of the Mizuki Park project 

  • Net sales and NPATMI came in at VND416bn (+25% yoy) and VND110bn (24% yoy), fulfilling 27% and 13% of the year’s target, respectively. Net profit was lower than last year because in Q1 19, Nam Long recognised a one-off profit from the acquisition of Viet Thien Lam (VND137bn). 
  • The profit was driven by the handover of the Mizuki Park project. NLG delivered 280 units to customers, corresponding to a value of VND618bn. Mizuki Park’s deliveries accounted for 77% and 66% of total units and total value, respectively. The remaining deliveries came from the handover of the Flora Novia and Nguyen Son projects. 

Q2 20 – Continued deliveries of the Mizuki Park and Flora Novia projects 

  • NLG will continue to deliver units in the Mizuki Park and Flora Novia in Q1. Total units handed over will be 268 units, corresponding to a value of VND425bn. 
  • Due to the effect of the Covid-19 pandemic, the majority of sales will happen in H2 20. Additionally, NLG is approaching the final stage of negotiations on a 35% stake transfer in the waterfront project. It is expected to record a gain in Q3. The profit is estimated at nearly VND400bn. 
  • Estimated revenue and net profit in Q2 20 will be VND432bn (-28% yoy) and VND146bn (+21% yoy). 

Valuation and recommendation 

Among listed real estate companies, NLG is one of the few companies owning a large land bank (nearly 700ha) located at relatively convenient locations: in Ho Chi Minh City or in provinces where there will be major infrastructure improvement in the medium-term like Dong Nai and Hai Phong provinces. NLG is also trading at attractive relative valuation with a 2020 forward PBR of only 1.0x. 

Using the RNAV method, we set a target price for NLG at VND31,500. We have a Buy on the stock with a total estimated return of 36%, based on the closing price on 27 May 2020.