HDG Initiation report – BUY

HA DO GROUP JSC (HoSE: HDG)

Hado Group Corporation (HoSE: HDG), formerly a construction enterprise under the Military Technical Institute of the Ministry of National Defense, has historically focused on construction. However, over the years, HDG has evolved into a diversified conglomerate with various business segments including construction, real estate, office leasing, energy, and hospitality. Among these, real estate and energy (particularly Renewable Energy – RE) have been identified as the key growth drivers for the company in the future.

HDG currently possesses an energy capacity of 462 MW (Hydro: 314 MW, Wind Power: 50 MW, Solar Power: 98 MW). Revenue from the electricity segment in 2024 reached VND1,891 bn, accounting for 68.1% of total revenue, a 5.2-fold increase compared to 2018 (VND363 bn, contributing 11.3% of total revenue). The anticipated end of the El Nino cycle in the 2025-2026 period is expected to positively influence HDG’s performance. Furthermore, HDG has plans to further augment its capacity, primarily focusing on RE sources with 6 projects awaiting investment approval (755 MW). However, for the 2025-2026 timeframe, it is assessed that none of these projects are likely to be completed.

Real estate segment includes over 42,000 m2 of leasable office space and a 217-room hotel. These businesses provide a stable stream of revenue and profit for HDG. Additionally, HDG is a reputable real estate developer with a track record of successful projects, including Hado Centrosa, Park View, and Charm Villas. Notably, the 3rd phase of the Charm Villas project is projected to be a key growth driver for HDG in the 2025-2026 period, with the remaining 108 villas expected to be launched for sale during this time, generating an estimated revenue of over VND2,700 bn.

The construction segment is no longer a core business activity for the company, following HDG’s divestment from Ha Do 45 JSC (2020) and Ha Do 1 JSC (2021) – two subsidiaries primarily operating in the construction field. Consequently, revenue from the construction segment has significantly declined since 2020, accounting for only 0.5% of total revenue by the end of 2024.

Valuation: For 2025, we forecast revenue to reach VND3,176 bn, +16.7% YoY, and VND1,072 bn in NPAT, +139.8% YoY, primarily driven by the launch of Charm Villas phase 3 and the recognition of VND743 bn in revenue. This projection incorporates a downward adjustment in revenue and profit for the Hong Phong 4.1 solar power project due to ongoing legal issues. We issue a BUY recommendation for HDG with a target price of VND 31,000 per share, representing an expected total return of 34.1%.