NLG Update – NLG

The 2Q2026 and 1H2026 business results were unfavorable but aligned with our forecasts. The decline in 2Q2026 was mainly driven by a higher decrease in revenue compared to SG&A expenses and higher financial expenses. ACBS expects handovers in the second half of 2026 to improve compared to the first half, and NLG may recognize gains from the partial divestment of a project; hence, we maintain our 2026 forecast.

We adjusted down the year-end 2026 target price by 27% to VND29,800/share, reflecting a 40%/30% reduction in pre-sales for 2026/2027 under the assumption that interest rates will remain high throughout 2026-2027, dampening housing demand. However, we maintain our BUY rating as the stock price has fallen 20% since our May 2026 update report. Furthermore, NLG possesses a large clean land bank, transparent project legality, and a well-established brand in the affordable housing segment—a segment expected to benefit from state and banking support policies in the near future.

NLG recorded weak 2Q2026 business results, with revenue of VND415 bn (-46% YoY) and NPATMI of VND55 bn (-44% YoY). The decline was mainly due to:
(1) Revenue declining faster than SG&A expenses (-46% vs. -6%),
(2) A 72% YoY increase in financial expenses, to VND61 bn.

For 1H2026, the company also reported weak performance, with revenue of VND1,895 bn (-8% YoY) and NPATMI of VND123 bn (-41% YoY), fulfilling 17% of the company’s profit target and 18% of our forecast. The drop was primarily driven by:
(1) Gross profit margin falling from 36.1% to 32.6%, as 2Q2026 handovers included more low-margin products such as EhomeS Can Tho, whereas 2Q2025 handovers comprised high-margin products like Valora Southgate,
(2) Higher handovers from joint venture projects (Mizuki and Izumi) in 1H2026 compared to the same period last year, leading to a VND52 bn YoY increase in minority interest.

Despite real estate market headwinds—such as high interest rates, tighter credit controls, and continuously changing regulations that impact homebuyer demand—NLG’s pre-sales grew modestly by 8% YoY in 2Q2026, reaching over VND3,000 bn. This was supported by its focus on affordable housing and financial support policies for home buyers. For 1H2026, NLG achieved pre-sales of over VND5,000 bn (+52% YoY), mainly driven by Sol Garden, Elyse Island, Mizuki, and Izumi projects.

Taking a conservative view, we reduced 2026/2027 pre-sales forecasts by 40%/30% to ~VND10,000/13,000 bn. This revision reflects the assumption that interest rates will stay high in 2H2026, alongside Resolution 21 (issued in late July 2026) limiting apartment ownership terms based on the building’s life, which may weigh on future condominium demand.