NLG_Get ready for a fourth quarter sprint
21/10/2019 - 11:03
TP upside (downside) 3.2%
Close 18 Oct 2019
12M Target 29,625
- The headline 3Q19 numbers look weak. 3Q19 revenues declined by 71% YoY and PAT fell by 64% YoY. The main reason: only housing from mature projects were handed over in 3Q19.
- Guidance now appears stretched. 9M19 revenues (-51.5% YoY) reached 38% of full-year guidance and PAT (-40% YoY) reached 45% of FY19 guidance.
- Indications that new contract signings were weak in 3Q19 include the flat short-term advances in 3Q19 and the 61% YoY decline in revenue from inventory).
- But – NLG should hand over c.1.918 Flora condos in 4Q19.
3Q19 revenues were VND 392bn, decreasing 71% YoY because NLG only handed over homes at mature projects in 3Q19. In addition, VND792 bn of revenues from the project transfers to other developers was recognized in 3Q18 – these did not repeat in 3Q19. Consequently, 3Q19 PAT of VND163 bn decreased 64% YoY. In total, 9M19 revenues (-51.5% YoY) and PAT (-40.0% YoY) have achieved 38% and 45% of FY19 guidance, respectively.
Short-term advances from customers were flat in 3Q19 while revenues from sales of inventories (i.e., land, apartments, townhouses, and villas) was VND197bn, decreasing 61% YoY. These results indicate that there was no positive signal in terms of the amount of new contracts signed in 3Q19.
Handing over c. 1,918 Flora segment condos in 4Q19, of which c.1,400 condos at Mizuki Park should be recognized as gains from joint ventures and the sales of c.400 condos at Novia should be consolidated into NLG’s operating revenues.
We reiterate our HOLD-Outperform recommendation. The successful soft launch of Water Point occurred in 3Q19 and we expect its official launch to be implemented in October. We also expect launches of Akari City and Mizuki Park to be implemented in 4Q19. Based on our discussions with sales agents and other industry sources, many homebuyers (i.e., residential buyers, investors, and speculators) are awaiting the launches of these projects.
For the complete report, please access here: NLG Express-Note 3Q19 results
Analyst: Tam Nguyen, firstname.lastname@example.org