NLG Flash Note – BUY

NAM LONG INVESTMENT CORPORATION (NLG VN)

In 3Q2024, NLG recorded an after-tax loss of VND40 bn mainly due to lower profit shared from Mizuki JV. NPATMI in 9M2024 was VND15bn, completing only 3% of company target and 3% of our projection. However, we keep our 2024 forecast and target price unchanged because we expect significant revenue from Akari (Phase 2) project to be booked in 4Q2024.

Nam Long posted a disappointing 3Q2024 result with net revenue of VND371 bn (+4% YoY) and an after-tax loss of VND40 bn compared with NPAT of VND71 bn in 3Q2023. The loss was due to:

(1) Profit shared from associates and JVs mainly from Mizuki project declined by 82% YoY, to VND16 bn,

(2) Lower gross margin (34.6% vs 42% in 3Q2023) 

For 9M2024, NLG posted net revenue of VND828 bn (-46% YoY) and NPATMI of VND15 bn (-92% YoY), completing 12% and 3% of targets, respectively. The decline was mainly due to:

(1) Delivered lower number of landed properties which normally have higher margins (25 units # VND271 bn in 9M2024 vs 100 units # VND1,051 bn in 9M2023), especially at Valora Southgate leading to lower revenue and a lower gross margin (41.5% vs 56.3% in 9M2023),

(2) Profit shared from associates and JVs, mainly from Mizuki project declined by 59% YoY, to VND84 bn.

Sales performance in 3Q2024 was quite low with over 300 units sold (-53% QoQ and +29% YoY) and presales of VND846 bn (-44% QoQ and -6% YoY). Akari was the best seller in 3Q2024 with 129 units sold and presales of VND513 bn. Sales performance for 9M2024 recorded impressive YoY growth (3 times of units sold, to nearly 1,400, and 2 times of presales, to over VND3,500 bn). Akari was the main contributor which accounted for nearly half of 9M2024 presales.

Quick comment: Most of revenue and profit in 2024 will be recognized in 4Q2024 when key project Akari (Phase 2) is delivered from October with estimated revenue of VND3.4trn. Therefore, we keep our 2024 forecast unchanged with revenue of VND5,341 bn (+68% YoY) and NPATMI of VND535 bn (+11% YoY). For 2025, we forecast revenue at VND6,611 bn (+24% YoY) and NPATMI at VND590 bn (+10% YoY) which are mainly generated from Can Tho, Akari and Southgate projects. Our target price remained unchanged at VND46,300/share at the end of 2025.