1Q20 results: Demonstration of strength

VHM held its 1Q20 results call yesterday afternoon.

Key takeaways

• Maintaining growth momentum.
• 2020 earnings outlook is solid thanks to strong presales and bulk sales since 2018.
• VHM is exhibiting caution on new project launches amid the pandemic.
• Expanding into industrial and commercial.
• VHM discussed its initiatives to mitigate the COVID-19 impact

Our view

We maintain our BUY recommendation and reiterate VHM as one of our top picks in Vietnam. We believe that focusing on quality balance sheets, management execution capacity, and cash flow is key to outperformance in the very negative overall macro environment of 2020. VHM’s balance sheet offers reasonable leverage (net debt/equity of 0.3x) and should be supported by large cash inflows from unbilled but presold units. The potential for block sales and land sales provides the potential for further financial flexibility and rapid capital returns. Furthermore, we like the nascent move toward industrial real estate, which we believe plays to VHM’s (and the group’s) core strengths in its ability to obtain landbank, master planning, and project management. We also think that the medium- to long-term outlook for Vietnam industrial property has been fortified by COVID-19, which will provide further impetus for supply chain diversification.

For the complete report, please access here: 1Q20 results Demonstration of strength