VRE Update – OUTPERFORM

VINCOM RETAIL JSC (VRE VN)

A solid growth in 2Q2025 and 1H2025 profits mainly thanks to higher occupancy rates of malls, 5 new malls opened in 2024 and increased financial income. Adjust 2025 NPAT up by 19% to VND4,762 bn given financial income higher than expectation. Roll forward target price to 2026, to VND34,500/share and give an Outperform rating for this stock.

Property leasing segment is expected to have a solid performance in 2025 with estimated revenue of VND8,516 bn (+8% YoY) mainly thanks to higher occupancy rates and 5 new malls opened in 2024. VRE has successfully improved average occupancy rates of malls from the trough of 82.8% in 1Q2024 to 86.3% in 2Q2025 which is mainly driven by change in the tenant mix (increase areas for F&B, entertainment and life-style tenants). Gross margin improved from 53.9% in 2Q2024 to 55.5% in 2Q2025 thanks to higher occupancy rates and energy savings initiatives such as installing additional solar panels on mall’s roofs. The company keeps its plan to open 3 new malls in 2025 (Vincom Mega Mall Ocean City, Vincom Mega Mall Royal Island and Vincom Plaza Vinh) with a total additional GFA of nearly 117,000 sqm to increase total malls to 91 and total GFA to 1.96 mn sqm.

As of 06/30/2025, VRE cumulatively deposited VND1.8 trn to Vinhomes (HSX: VHM) to develop 4 malls (1 Vincom Center, 2 Vincom Mega Malls and 1 Vincom Plaza) in Vinhomes Green Paradise Can Gio which are expected to be opened in 2027-2028. At the end of 2Q2025, VRE deposited VND21,543 bn for investment and business purposes (+2% YTD), of which VND18,697 bn or 87% deposited to related parties.

Regarding property sales, VRE is on track with its plan to launch commercial landed properties units in two Vinhomes’s projects Vinhomes Royal Island (~1,000 units with a total investment capital of VND4.8 trn) and Vinhomes Golden Avenue (~280 units with a total investment capital of VND1.3 trn) in 2H2025 and deliver in 2026. We expect these two projects to have good absorption rates and become a key growth driver for the company’s business result in 2026. On the other hand, 2025 business result of this segment is insignificant with estimated revenue of VND205 bn (-76% YoY) as shophouses in old projects have nearly finished delivery.

As financial income in 1H2025 is higher than our expectation, we revise 2025 NPAT up by 19% to VND4,762 bn (+16% YoY). We expect higher growth in 2026 with revenue of VND12,773 bn (+43% YoY) and NPAT of VND5,888 bn (+24% YoY) mainly thanks to deliveries of shophouses in Vinhomes Royal Island and Vinhomes Golden Avenue and solid performance of malls. We roll forward target price to 2026, to VND34,800/share and give an Outperform rating for this stock.