VAN PHU INVEST (VPI VN)

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Close 13 November 2019

Price VND 41,400

Looking for a strategic partner

We met with VPI’s management on November 8 to discuss their business outlook. We do not cover VPI and have no investment view on the stock. The following bullets present a summary of management’s discussion.

VPI should meet its guidance for 2019 revenue and profit due to revenue recognition from The Tera–Hao Nam, The Terra–An Hung, and Oakwood Residence Hanoi projects.

Revenue and profit in 2020E might be flat YoY because most key projects under construction will only be handed over to homebuyers from 2021E.

VPI is seeking a strategic partner to purchase ownership of 15-20%, especially those with experience in real estate, architecture, and construction.

Key projects in pipeline: Grand Palace – Giang Vo (78 apartments, 65 hotel units, 32 shophouses), Grandeur Place – Pham Hung (3 buildings x 45 floors), and Grandeur Place – Dinh Tien Hoang (476 apartments).

Large potential landbank for development in the next 3-5 years of around 500ha. Land under construction is 5.4ha, land under development is 333ha, and others are 156ha. Their landbank is located in Hanoi, HCMC, Bac Ninh, Quang Ninh, Thanh Hoa, Hue, Nha Trang, Can Tho, and Ba Ria-Vung Tau.

VPI stated that it will maintain its cash dividend policy. VPI has distributed cash dividends in the past two years (i.e., since the IPO). Cash dividend per share for FY 2017 was VND1,100 and for FY2018 was VND1,600. It is targeting VND2,000 in DPS for FY2019.

Business model for capital optimization. Revenues come from two main sources: property sales and leasing. VPI’s property product lines include Grandeur Palace (luxury), The Terra (mid-end), and The Victory (standard). Management noted that its cash flows from property leasing (i.e., hotels, office blocks, and service apartments) are typically reinvested into its landbank development.

Please access the link for our complete report: Company visit-VPI-Looking for strategic partners

Analyst: Tam Nguyen, tam.nguyen@yuanta.com.vn