VRE Flash note – BUY

VINCOM RETAIL JSC (VRE VN)

A YoY decline in 3Q2024 result was mainly due to a lower number of shophouses delivered. 9M2024 NPAT was in line with our estimation, thus we keep 2024 forecast unchanged. Roll forward target price to VND27,900/share at YE2025 and reiterate our Buy rating.

VRE posted a decline in 3Q2024 result with revenue of VND2,078 bn (-38% YoY) and NPAT of VND906 bn (-31% YoY). This result was mainly due to a 97% YoY decline in property sales segment, to VND36 bn given a lower number of shophouses handed over (7 units in 3Q2024 vs 268 units in 3Q2023) as delivery at Dong Ha Quang Tri project has nearly completed. 

For 9M2024, VRE posted revenue of VND6,811 bn (-9% YoY) and NPAT of VND3,010 bn (-10% YoY), completing 68% of the company’s target and 72% of our forecast. The decline in 9M2024 result was mainly due to a lower number of shophouses delivered (156 units in 9M2024 vs 292 units in 9M2023).

Regarding property leasing segment, revenue went sideways at VND1,983 bn in 3Q2024 and VND5,851bn in 9M2024 although VRE opened 3 new malls in 2Q2024 (VMM Grand Park, VCP Dien Bien Phu and VCP Ha Giang with a total GFA of 67,000 sqm) and 1 new mall in 3Q2024 (VCP Bac Giang with GFA of 13,400 sqm and occupancy rate of 97%). This was mainly due to a lower average occupancy rate (84.6% in 3Q2024 vs 85.4% in 3Q2023). Segmented gross margin in 9M2024 declined from 58.9% to 55.8% mainly due to: (1) higher energy cost given higher electricity price and volume during hot weather and (2) leasing revenue from commercial streets had a margin of 40-50% which was lower than the normal margin of malls.

At the end of 3Q2024, VRE had 87 malls with a total GFA of c.1.83 mn sqm. In 4Q2024, the company will open VCP Dong Ha Quang Tri with GFA of 14,300 sqm and expected occupancy rate at launch of 92%. For 2025, VRE plans to open 3 new malls (VMM Ocean City, VMM Royal Island and VCP Vinh) with a total new GFA of 119,800 sqm (Please refer to Table 2).

Regarding property sales, unbilled backlog at the end of 3Q2024 was VND249 bn which is expected to be realized in 4Q2024 and 1H2025. VRE acquired commercial components in two Vinhomes’s projects Vinhomes Royal Island and Vinhomes Golden Avenue with retail GFA of 85,600 sqm and 24,200 sqm, respectively. Total investment capital of these projects is around VND6.1 trn and VRE already deposited VND3trn to Vinhomes. VRE expected to launch these two projects in 2025.