VHM – Stayed tuned as this is low season – EARNINGS UPDATE

• VHM’s 1Q21 revenue reached VND12,986bn, up 99.2% yoy while net profit reduced 21.2% yoy, fulfilling 18.5% of our full-year forecast.
• VHM sets a target of VND91tr in presales value (+44.9% yoy) for FY21F.
• Attractive dividend plan of 15% in cash and 30% in shares.

1Q21 performance: contrast between top line and bottom line growth
• Vinhomes JSC (VHM) reported a 1Q21 revenue of VND12,986bn, up 99.2% yoy. The strong growth was driven by a 75.2% yoy surge in project delivery revenue to VND10,016bn, mainly due to the delivery of c.2,900 retail units from Ocean Park, Grand Park and Smart City.
• 1Q21 gross profit margin (GPM) widened 2.6% pts yoy to 47.8% due to higher portion of low-rise from Grand Park.
• Overall, 1Q21 net profit decreased 21.2% yoy to VND5,396bn, fulfilling 18.5% of our FY21 full year forecast.
• 1Q21 financial income fell 73.1% yoy to VND2,307bn due to the decreasing property handover of BCC projects (-77.4% yoy) and high base from bulk sales at Vinhomes Grand Park in 1Q20.
• VHM’s presales in 1Q21 was 1,592 units (-67.0% yoy), equivalent to a contract value of VND6.0tr (-6.3% yoy).
Ambitious targets for presales and NP growth in FY21F
• VHM sets a target of VND91tr in presales value (+44.9% yoy) and 37,000 units in presales volume (+34.2% yoy) for FY21F, of which retail contracts from existing mega projects will contribute 60% and bulk sales will be 40%.
• In our view, the peak season of presales will be in 3Q21 with the launches of three new projects including Vinhomes Co Loa, Vinhomes Dream City and Vinhomes Wonder Park.
• VHM’s BOD is currently submitting to the AGM a target of 15% for FY21F net profit growth, which is higher than the 5% growth in our full year forecast. We will take a closer look when the details are available.
We see rising construction cost on material prices hike in FY21F
VHM has signed long-term contracts for raw material prices, which will keep its FY21F business results from being affected by the hike in building materials prices. Steel accounts for c.5% of total apartment building cost, so the company’s GPM may reduce slightly by 1-2% pts if steel prices remain at current high level in the next two years.
VHM expects to pay record dividend of 45% in cash and shares
VHM released its plan of paying dividends in both cash and stocks. Share payment rate is 30% on charter capital, equivalent to the total number of 987m additional shares. Cash dividend is 15% on par value, equivalent to VND4,934bn. Expected execution time is in 3Q21 or 4Q21. This is the highest dividend payment rate of VHM in recent years.

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