NLG update – HOLD

NAM LONG INVESTMENT CORPORATION (NLG VN)

Increase target price by 18% to VND56,597 thanks to revaluation of key projects and change our rating from Buy to Hold as the stock price has nearly reflected its growth in 2022. 

NLG ended 2021 with unaudited revenue of VND5,206bn (+135% YoY) and NPATMI of VND1,071bn (+28% YoY), equivalent to 100% and 90% of our forecast, respectively. The underperforming bottom line was mainly due to a higher minority interest than expected. Growth in 2021 mainly came from:

(1) A YoY doubling in delivered volume to over 2,000 units, mainly at Akari City (1,525 units) and Southgate (507 units); 

(2) VND423bn of revaluation surplus from consolidating Izumi project after NLG acquired additional 30% stake from Keppel Land to increase its ownership to 65.1% in 1Q2021; and

(3) VND361bn of financial profit from consolidating Southgate project after increasing voting ratio from 50% to 65% in 3Q2021. This amount was the remaining assets revaluation which was previously recorded based on project delivery.

Sales performance in 2021 outperformed 2020 with over 1,900 sold units (+71% YoY) and over VND6,800bn of sales value (+81% YoY), mainly at Mizuki and Southgate with pre-sales of around VND2,400-2,500bn each. If adding the bookings of 275 units with a total value of nearly VND2,000bn at Izumi project in November 2021, NLG pre-sold over 2,200 units (+95% YoY) with a total sales value of over VND8,80 0bn (+132% YoY). Given their good brand name and attractive projects, we forecast 2022 sales value of over VND11,000bn, mainly at Mizuki, Southgate, Akari, Izumi and Can Tho 43ha projects.

NLG maintained a healthy financial status with a net debt/equity ratio of -1.8% at YE2021 compared with 20.1% at YE2020 mainly thanks to ~VND2,000bn receipt from a private placement of 60mn shares at VND33.5k/share in 9/2021 and Akari’s receipts from customers before delivery. We expect this ratio at -7.4% at YE2022.

We forecast 2022 revenue at VND6,266bn (+20% YoY) and NPATMI at VND1,236bn (+15% YoY) thanks to delivery of nearly 1,700 units mainly at Southgate, Can Tho 43ha and Akari and ~VND300bn of financial profit from transferring 50% of Paragon Dai Phuoc. Based on the RNAV method, we derive a 2022 target price of VND56,597, up by 18% compared to our previous target price mainly thanks to an increase in estimated average selling price of Mizuki, Southgate and Izumi by 4-20%. We change our rating from Buy to Hold as we think stock price has nearly reflected its growth in 2022.