NVL–Annual General Meeting Takeaways –final

AGM Takeaways

Event: NVL held its annual general meeting (AGM) on Apr 27, 2021.

Key takeaways

2021 guidance: Revenue to quintuple but income to be flat. NVL set out 2021 targets for revenue of VND 27.5tn, 5.5 times higher YoY, and net income of VND 4,1tn, +5% YoY.

10k units of presales target based on urban periphery second home and integrated resort sales. Management states that they have reached c.25% of their full-year presales target in 1Q21. NVL continues to conduct business and develop its 23 projects, but second home and integrated resort projects will each account for 45% of 2021 unit sales, with the remaining 10% attributable to residential projects in HCMC.

Solid 1Q21 preliminary results. The company reported 1Q21 revenues of VND 4,532bn (c. USD 194.5mn), +370% YoY; and 1Q21 PAT of VND 687bn (c. USD 29.5mn), 2.3x higher YoY. These results are preliminary and NVL expects them to within 5% of the final quarterly results.

Convertible bonds of VND 1tn (c. USD 44mn) remain on the balance sheet as at 1Q21, down by c. USD 189mn QoQ. We estimate that 63.4% (USD 120mn) of the decline was due to bond repurchases by NVL with the remainder attributable to conversions. Management may buy back 90% of the remaining CBs depending on the market situation and regulatory & BOD approvals. NVL did not substantially increase its long-term borrowing in 1Q21.

No dividends on 2020 or 2021 earnings. As approved by shareholders at the AGM, the company has no plan for a dividend in 2021.

Nova Group integration plans could create an ecosystem to increase value for NVL projects given that Nova Group also operates F&B businesses (e.g., restaurants, coffee shops) that are suitable for residential lifestyles. Shareholders approved the plan for Nova Group to purchase outstanding shares of NVL from the chairman and related parties without having to carry out a public tender offer.

Our view:  NVL was ahead of the game in moving to benefit as the peripheral markets awakened in recent months as homebuyers seek attractive (i.e., affordable) opportunities in the “peaceful” countryside …  and Unforeseen catalysts …

For the complete report, please access here: NVL–Annual General Meeting Takeaways –final

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