NLG VN

Hold-outperform

TP upside  +27%

Close  24 Oct 2019

Price                VND 28,500

12M Target        VND 36,200

Previous Target    VND 29,623

Change            +22%

What’s new?

• Soft launch of Waterpoint project occurred on July 20, 2019.
• Strong ASPs at Araki City and Mizuki Park. Subsequent blocks at both projects will be launched in 4Q19.
• Profit recognition from Mizuki Flora starts in 4Q19.

Soft launch of Waterpoint project occurred on July 20, when homebuyers could book villas, semidetached units, and townhouses in the Rivera 1 and Aquaria subdivisions. Our discussions with sales agents indicate that NLG has received over 1,700 bookings (including garden houses and villas) in early October. The projected selling price is around VND16mn per sqm (excluding construction value).

Part 2 of Araki City’s Phase 1 is ready to go and we expect around 608 units (i.e., Blocks AK 3 and 4) to be launched in 4Q19. Based on our discussions with agents, we think that many homebuyers have been waiting for these launches. Sales agent chatter indicates that the projected selling price per sqm of these two blocks will be c. VND31mn (excluding VAT). Additionally, we expect that the income from transferring 50% of Akari City to a Japanese investor will be recognized in 4Q19.

Profit recognition from Mizuki Park: NLG states that c.640 units of two blocks (i.e., MP 1 and 2) will be delivered in 4Q19, slightly later than NLG’s original 3Q19 delivery target. Around 920 units of three blocks (i.e., MP 3,4, and 5) should be delivered in 1Q20. Additionally, we expect other blocks to be launched in 4Q19, with a projected selling price per sqm of around VND32mn (excluding VAT).

Yuanta vs consensus. Our 2021E net income forecast of 1,458 bn is 11% below the Street. This is probably because we conservatively exclude revenues and profits from the Hai Phong, Paragon, and Waterfront projects due to lack of visibility.

We increase our target price by 22% after three fair value assumption changes: 1) we apply a DCF methodology to Water Point Phase 1 vs our previous application of the land’s standalone market price, 2) we raise our ASPs at Akari City (+19%) and Mizuki Park (+22%) after discussions with agents, and 3) we include Paragon Dai Phuoc project in our valuation and assume ASPs of 30% higher than NLG’s land cost for this project.

For the complete report, please access here: Company update-NLG-Fourth quarter sprint is under way

Analyst: tam.nguyen@yuanta.com.vn