HHV Flash note – BUY

DEO CA TRAFFIC INFRASTRUCTURE INVESTMENT JSC (HHV VN)

HHV reported a 1Q2025 NPAT of VND173 bn (+51.8% YoY), achieving 31.7% of its full-year target and 35.5% of ACBS’s forecast. This positive result was primarily thanks to enhancements in gross profit margin. Maintain our 2025 forecast and reiterate our BUY recommendation with unchanged YE2025 target price at VND16,000/share, reflecting a potential return of  32.7%.

HHV set ambitious financial targets for 2025 with revenue of VND 3,585 bn (+8% YoY) and NPAT of VND 555 bn (+12% YoY). In 1Q2025, HHV reported revenue of VND 735 bn (+6.5% YoY) and NPAT of VND 173 bn (+51.8% YoY), fulfilling 20.4% and 31.7% of its annual targets, respectively. HHV’s growth was primarily driven by two core business segments: BOT toll collection and construction services. 

BOT Segment: This segment remained the primary revenue contributor, accounting for 73% of total revenue, with VND 526 bn (+10.5% YoY). Growth was driven by a 16% YoY increase in PCUs, equivalent to 1.4 ml additional PCUs, alongside planned toll rate adjustments under its financial strategy. In 4Q2024, HHV acquired the remaining 38% stake of Deo Ca Group in Cam Lam – Vinh Hao Expressway JSC, fully consolidating its financial results from 4Q2024 onward.

Construction Segment: This segment contributed 23% of total revenue, reaching VND 166 bn (-15.3% YoY). The decline was attributed to lower project volume, particularly in the Quang Ngai – Hoai Nhon Expressway development.

Gross Profit Margin: Gross profit margins strengthened in 1Q2025, rising from 48.6% to 52.5%. Specifically, the BOT operations experienced margin expansion from 66.2% to 69.8%, driven by higher vehicle throughput and toll fee adjustments. The construction margins declined from 6.6% to 4.0%, as the projects undertaken in 1Q2025 were government-assigned contracts with lower technical complexity, leading to reduced profitability compared to the previous year.

Outlook: Between 2025 and 2027, vehicle traffic through BOT toll stations managed by HHV is projected to grow steadily at 8–10%, ensuring a stable revenue stream from toll collections. Additionally, increased public investment spending by the government is expected to generate new project opportunities for HHV. As of 1Q2025, HHV’s backlog value stands at VND 2,300 bn, 2.3 times its 2024 construction revenue, reinforcing its strong business outlook for 2025–2026. Over the next two years, HHV is estimated to add VND 5,000 bn in backlog from major projects such as Huu Nghi – Chi Lang, Tan Phu – Bao Loc, and HCMC – Thu Dau Mot – Chon Thanh. We maintain our 2025 forecast and YE2025 target price at VND16,000/share. Reiterate our Buy recommendation for this stock.