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VHM – Robust presales growth in FY21F – Update

Company Note 22/02/2021    217

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  • 4Q20 witnessed a strong growth with 4Q20 revenue and net profit increasing by 53.8% yoy and 79.1% yoy, respectively.
  • We expect FY21F presales value to grow 45% yoy, driven by three existing mega projects.
  • Reiterate Add with higher RNAV-based TP of VND134,300.

Market price

Target price

Dividend yield

Recommendation

Sector

VND 103,100

VND 134,300

0%

ADD

PROPERTY

4Q20 results demonstrated solid growth

4Q20 business results maintained the strong growth since 3Q20 after a subdued result at 1H20. VHM has handed over a total of 11,600 retail units in 4Q20 which are mainly from three mega projects including Vinhomes Ocean Park, Grand Park, and Smart City. As a result, 4Q20 posted an increase of 53.8% in revenue and a surge of 79.1% yoy in net profit. For the whole FY20, adjusted revenue reached VND93.9tr (+44% yoy), including bulk sales which is recorded in financial income. Consequently, FY20 net profit rose 28% yoy to VND27,839bn, exceeding 11.9% of our full-year projection.

Recovery of residential market bolster presales growth since FY21F

We expect Vietnam’s residential market to recover in 2021F, 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 both Northern and Southern Vietnam in FY21F. We expect FY21F presales volume/value to increase 34%/45% yoy.

We expect net profit CAGR of 44.7% during FY20-23F

We forecast VHM’s FY21F revenue and net profit to increase 17.4% and 4.6% 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. In the long term, we expect an EPS CAGR of 44.7% in FY20-23F, 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 growth drivers for VHM.

Reiterate Add with a higher TP of VND134,300

We reiterate our Add rating with a higher RNAV-based TP of VND134,300. We believe it is worth accumulating VHM stocks, given its strong presales and abundant unbilled bookings. Potential re-rating catalyst is faster-than-expected bulk sales. Downside risks are delays in obtaining permits for new launches.

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