VHM – Resilient earnings growth deserves a rerating – Update

• 9M21 revenue and net profit grew robustly 24.9% yoy and 65.8% yoy, respectively, fulfilling 74.1% and 93.0% our expectation.
• We expect FY22F presales value to grow 109.4% yoy, driven by three new mega projects including Dream City, Co Loa and Wonder Park.
• Reiterate Add with higher RNAV-based TP of VND115,000.

9M21 recap: earnings solid growth despite the impact of Covid-19

VHM posted 3Q21 results with VND20.7tr in net revenue (-21.9% yoy) but VND11.2tr in net profit (+84.3% yoy). These strong results were primarily driven by the recognition of two bulk sales transactions for total revenue of VND13.0tr in addition to the ongoing handovers of retail units at Ocean Park and Smart City. As such, VHM recorded robust 9M21 results with net revenue increasing 24.9% yoy to VND61.7tr and net profit surging 65.8% yoy to VND27.1tr, fulfilling 74.1% and 93.0% of our respective full-year forecasts.

Recovery of residential market bolster presales growth since FY22F

We expect Vietnam’s residential market to recover in 2022F, based on: (1) a recovery of macro fundamentals propelling the property market; (2) housing purchasing decisions underpinned by affordable mortgage interest rates, and (3) an improvement in new supply thanks to the loosening of regulatory bottlenecks. Notably, VHM contributes a considerable amount to the total supply in Northern Vietnam in FY22F. We expect FY22F presales volume/value to increase 47.7%/109.4% yoy.

We forecast a CAGR for net profit at 47.1% in FY21-23F

We forecast VHM’s FY21F/22F revenue and net profit to increase 22.6%/43.1% and 16.3%/50.6% yoy, respectively, underpinned by retail delivery at Ocean Park, Grand Park, Smart City and the launch of 3 new projects namely Dream City, Co Loa, and Wonder Park. We expect an EPS CAGR of 47.1% in FY21-23F, driven by deliveries of mega projects. In the period after 2022, we believe that Vinhomes Green Ha Long and Vinhomes Long Beach Can Gio will be blockbusters and key growth drivers for VHM.

Reiterate Add with a higher TP of VND115,000

We reiterate our Add rating with a higher RNAV-based TP of VND115,000. We believe it is worth accumulating VHM stocks, given its resilient presale performance and abundant unbilled bookings. Potential re-rating catalyst is faster-than-expected bulk sales. Downside risks are delays in obtaining permits for new launches and prolongation of the pandemic.

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