November 14, 2023

[Vietnam] Real Estate

Nam Long Investment Corporation Hold

(NLG VN) (Update)

Target price:
Pre-sales picked up VND40,389
(Upside: +9.2%)

Mirae Asset Securities (Vietnam) JSC

Lam Tran, [email protected]

9M23 earnings & presales results ▪ Nam Long Investment Corporation (NLG) reported 9M23 revenue of VND1,545n (-43% YoY)
and NPAT of the parent of VN193bn (+62.7% YoY). The majority of reported revenue came
from the handover of Waterpoint, at a value of VND1,051bn (100 units), with the remainder
coming from Akari, at VND55bn (20 units), and other revenue of VND238bn. Despite the
steep drop in revenue, NPAT was well–managed, thanks to the following:

➢ Income from JV continued to make a significant contribution (56.3%) to EBT, at

VND201bn.

➢ SG&A declined to VND626bn from VND769bn (-18.6% YoY), thanks to sound

management.

▪ On the other hand, presales continued to disappoint investors, at VND1,769bn (-82.2%, YoY)
in 9M23. However, we believe that the pace of presales is about to pick up, as they reached
VND902bn in 3Q23, higher than the VND867bn of 6M23. This suggests that the bottleneck is
easing.

▪ While revenue, NPAT of the parent, and pre-sales all remain well below FY23 targets, the
company is targeting revenue of approximately VND3,000bn in 4Q23 alone, which we view
as highly aggressive.

FY23 outlook & valuation ▪ We maintain our Hold rating and target price of VND40,389 for NLG, based on a combination
of valuation methods, including RNAV, precedent transaction, and book value, as mentioned
in the previous report. Despite the company’s failure to achieve its FY23 targets, we note that
pre-sales have begun to pick up, albeit at a still-modest pace. More importantly, new policies
that directly govern the real estate industry await approval from the National Congress. Once
these become laws, we expect them to act as substantial catalysts for the industry.

Key data
Share price (November 14, 2023) 37,000 Market cap (VND bn) 14,211
(%) nde
2 NP (23E, VND bn) 733 Shares outstanding (mn) 384
2 Consensus NP (23E, VND bn) 691 Free float (%) 56.6
EPS growth (23E, %) 42 Foreign ownership (%) 42.2
P/E (23E, x) 21.2 Beta (12M) 1.4
Market P/E (x) 13.0 52-week low (VND) 16,450
ov 22 an 2 ar 2 ay 2 ul 2 ep 2 ov 2 VN-Index 1,100 52-week high (VND) 40,750

Share performance Earnings and valuation metrics

(%) 1M 6M 12M FY () 2018H 2019H 2020H 2021H 2022H 2023F
Absolute 6.3 16.9 90.7 Revenue (VND bn) 3,480 2,546 2,217 5,206 4,339 4,605
Relative 11.1 13.2 75.5 Gross profit (VND bn) 1,503 1,066 671 1,778 1,984 2,474
Gross profit margin 43% 42% 30% 34% 46% 54%
NP of the parent (VND bn) 763 961 835 1,071 556 733
EPS (VND) 3,521 4,479 3,078 3,099 1,345 1,810
ROE (%) 20% 18% 13% 15% 6% 11%
P/E (x) 7.5 7.3 9.9 8.2 22.9 21.2
P/B (x) 1.3 1.3 1.4 1.5 1.5 1.6
Source: Company data, Mirae Asset Securities (Vietnam) JSC
PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.
November 14, 2023 Nam Long Investment Corporation

9M23 earnings & presales results

Figure 1: Revenue & NPATOP Figure 2: Pre-sales

3,000
2,709

2,500

2,000

1,545
VNDbn

1,500

1,000

500
194
119

-
Revenue NPATOP
9M2022 9M2023

Source: NLG, Mirae Asset Vietnam Research Source: NLG, Mirae Asset Vietnam Research

Mirae Asset Vietnam Research 2

November 14, 2023 Nam Long Investment Corporation

Nam Long Investment Corporation

Income statement (Summarized) Balance Sheet (Summarized)

(VNDbn) 2020H 2021H 2022H 2023F (VNDbn) 2020H 2021H 2022H 2023F
Revenue 2,217 5,206 4,339 4,605 Current Assets 9,570 21,784 23,720 24,345
Cost of Sales 1,546 3,427 2,355 2,131 Cash & Equivalents 1,073 3,112 3,773 2,107
Gross Profit 671 1,778 1,984 2,474 Short term investments 35 744 987 1,090
Finance Income 727 445 386 375 Short term receivables 610 720 1,310 925
Interest expense 103 112 199 177 Short-term prepaid expenses 478 524 1,232 1,403
Profit/Loss from JV 142 91 25 130 Other short-term receivables 1,140 690 1,028 1,209
SG&A 434 997 1,155 884 Inventories 6,069 15,490 14,830 17,047
Operating Profit 1,002 1,205 1,041 1,898 Other current assets 164 505 559 565
Other Profit 13 435 29 - Non-current Assets 4,073 1,833 3,365 3,011
Pretax Profit 1,015 1,640 1,070 1,898 Long term investment 3,262 873 2,136 1,788
Income Tax 165 162 204 380 Other non-current assets 811 961 1,229 1,223
Net Profit 850 1,478 866 1,518 Liabilities 6,922 10,090 13,770 12,610
Non-Controlling Interests 15 407 309 785 ST payables to suppliers 390 585 981 425
Controlling Interests 835 1,071 556 733 ST advances from customers 2,098 2,463 3,271 2,871
EBITDA 401 902 890 1,756 Statutory & employee payables 180 444 365 396
EBITDA Margin (%) 18% 17% 21% 37% ST accrued expenses 493 767 922 824
Operating Profit Margin (%) 45% 23% 24% 38% Other ST payables 345 765 1,508 633
Net Profit Margin (%) 38% 28% 20% 33% Total debts 2,457 3,608 5,179 5,916
Other long-term liabilities 958 1,457 1,543 1,543
Equity 6,720 13,528 13,315 14,603
Share capital 2,853 3,829 3,841 3,841
Share premium 989 2,643 2,643 2,643
Retained earnings 2,132 2,444 2,493 3,035
Minority interest 1,117 4,598 4,325 5,110
Total Assets (Liabilities & Equity) 13,643 23,618 27,085 27,356

Cash Flows (Summarized) Forecasts/Valuations (Summarized)

(VNDbn) 2020H 2021H 2022H 2023F 2020H 2021H 2022H 2023F
EBT 1,015 1,640 1,070 1,898 P/E (x) 9.9 8.2 22.9 21.2
Dep & Amor 23 30 36 36 P/B (x) 1.4 1.5 1.5 1.6
Profit from investing activities (868) (958) (410) (355) EPS (VND/share) 3,078 3,099 1,345 1,810
Interest expense 53 102 148 177 BVPS (VND/share) 19,641 23,318 23,407 24,717
Changes in operating assets and 222 890 843 1,756 Revenue Growth (%) -13% 135% -17% 6%
liabilities
Changes in receivables (64) 53 (2,590) 29 EBITDA Growth (%) -49% 125% -1% 90%
Changes in inventories (1,668) 1,215 (593) (2,217) Gross profit growth (%) -37% 165% 12% 34%
Changes in payables 683 (582) 1,665 (1,792) EPS Growth (%) -31% 1% -57% 35%
Interest paid (48) (83) (118) (177) DSO (days) 88 47 85 89
Corporate income tax paid (198) (153) (211) (380) DIO (days) 1,224 1,148 2,350 2,856
Changes in other operating items (38) (45) (27) - DPO (days) 67 52 121 132
Net cash generated by operating (1,111) 1,296 (1,031) (2,780) 13% 15% 6% 11%
ROE (%)
activities (CFO)
Net Capex (44) (19) (73) (30) ROA (%) 7% 8% 3% 5%
Net purchase/sales of debt (40) (755) (277) (103) ROIC (%) 10% 11% 5% 8%
Net investment in other entities (1,076) (1,260) 648 348 Debt/Total Assets (%) 18% 15% 19% 22%
Interest and dividends received 118 28 154 355 Debt/Equity (%) 37% 27% 39% 41%
Net cash generated by investing (1,043) (2,006) 452 569 3.7x 7.8x 4.3x 9.4x
Interest coverage ratio (x)
activities (CFI)
Issuance of share/Shares buy back (6) 2,637 187 - Debt service coverage (x) 2.1x 1.4x 0.9x 1.1x
Net debt issuance/(repayment) 1,589 444 1,574 737
Dividend paid (257) (333) (521) (192)
Net cash generated by financing 1,326 2,749 1,241 545
activities (CFF)
Changes in cash & equivalents (827) 2,038 662 (1,666)
Beginning cash 1,901 1,073 3,112 3,773
Ending cash 1,073 3,112 3,773 2,107

Source: Company data, Mirae Asset Vietnam Research forecasts

November 14, 2023 Nam Long Investment Corporation

Appendix 1

Important disclosures and disclaimers

Two-year rating and TP history
Company (Code) Date Rating Target Price ( ) 2 target price
,
NLG VN Equity November 13, 2023 Hold 40,389
NLG VN Equity July 27, 2023 Hold 40,389 ,
NLG VN Equity June 5, 2023 Buy 40,389
,
NLG VN Equity Sep 9, 2022 Non-rated N/A
NLG VN Equity July 11, 2022 Buy 62,000 2 ,

ov 22 an 2 ar 2 ay 2 ul 2 ep 2 ov 2

Stock ratings Sector ratings

Buy Expected 12-month performance: +20% or greater Overweight Expected to outperform the market over 12 months
Trading Buy Expected 12-month performance: +10% to +20% Neutral Expected to perform in line with the market over 12 months
Hold Expected 12-month performance: -10% to +10% Underweight Expected to underperform the market over 12 months
Sell Expected 12-month performance: -10% or worse

Rating and TP history: hare price (─), TP (▬), ot Rated (■), Buy (▲), Trading Buy (■), Hold (●), ell (◆)
* Our investment rating is a guide to the expected return of the stock over the next 12 months.
* Outside of the official ratings of Mirae Asset Daewoo Co., Ltd., analysts may call trading opportunities should technical or short-term material developments arise.
* The TP was determined by the research analyst through valuation methods discussed in this report, in part based on estimates of future earnings.
* TP achievement may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

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member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the
subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts
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investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know
of any actual, material conflict of interest of the Analyst or MAS except as otherwise stated herein.
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November 14, 2023 Nam Long Investment Corporation

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