VHM Update – BUY

VINHOMES JSC (VHM VN)

2023 business results were slightly lower than ACBS’s forecast because project handover in 4Q2023 was not as expected. Reiterate our BUY recommendation with a target price of VND61,400/share at YE2024, down by 8% compared to the previous target price.

2023 business results were positive with revenue of over VND103.3 trn (+66% YoY) and PAT of nearly VND33.3 trn (+14% YoY), equivalent to 90% of ACBS’s forecast and 111% of the company’s profit target. Revenue mainly came from projects delivery launched in the 2021-2022 period such as Ocean Park 2 (~VND57.6 trn), Ocean Park 3 (~VND26.8 trn), Smart City (~VND4 trn), etc.

Gross margin decreased by 14.8% to 34.4% because the majority of units delivered at Ocean Park 2 & 3 were low-rise units under BCC contracts, so VHM had to share profits with partners.

In 2023, VHM recorded presold units of ~28,800 (-7% YoY) with presales of ~VND87 trn (-32% YoY). Because the real estate market did not have many positive recovering signals, the company only launched two new small-scale projects, Vinhomes Golden Avenue in Quang Ninh and Vinhomes Skypark in Bac Giang, and continued to sell the remaining units at existing projects Ocean Park 1, 2, 3, Smart City, Grand Park, etc.

Presales in 4Q2023 improved sharply compared to the same period last year and the previous quarter with nearly 19,700 units (+535% QoQ) and contracted value of ~VND30.3 trn (+68% YoY and +88% QoQ), including a bulk sales transaction at a project in HCMC with a value of ~VND18.8 trn for nearly 14,500 high-rise and low-rise units.

In 2024, VHM plans to launch 3 new projects: Vu Yen, Co Loa and Wonder Park with details in Table 1. We expect 2024 presales to improve to over VND96 trn (+11% YoY) with assumptions that interest rates will stabilize at the current level, the government continues to promote investment in infrastructure development and market sentiment will gradually improve compared to last year.

Because presales of Ocean Park 2 & 3 were lower than our forecast, we adjust our 2024 revenue forecast by 18% to ~VND71.2 trn (-31% YoY). However, 2024 PAT is adjusted up by 3% to over VND34.6 trn (+4% YoY) thanks to the bulk sales transaction of the project in HCMC incurred in 4Q2023 which was out of our expectation. Using the NAV method, we reiterate our BUY recommendation with a target price of VND61,400/share at YE2024 which is 8% lower than the previous target price mainly due to an increase in net debt and updated presales of Ocean Park 2 & 3 projects.