- 2024-07-30T00:00:00
- Company Research
ACG announced its H1 2024 results with net revenue of VND1.7tn (USD67.5mn; +4% YoY; 44% of our 2024F forecast) and NPAT-MI of VND200bn (USD7.8mn; +39% YoY; 38% of our 2024F forecast). In Q2 2024, net revenue was VND1tn (USD40.2mn; +48% QoQ, +6% YoY) and NPAT-MI was VND118bn (USD4.6mn; +45% QoQ, +10% YoY).
- H1 2024 revenue rebounded modestly due to sluggish domestic sales, partially offset by solid exports recovery. H1 net revenue rebounded 4% YoY, largely driven by exports (20% of total sales; +34% YoY) and offset by domestic sales (80% of total sales; -1% YoY). Strong QoQ growth in both domestic and exports sales in Q2 is because Q1 is typically a low season for ACG.
Although domestic sales remained sluggish due to a still-weak real estate market, we believe domestic sales already bottomed out in Q1, as Q2 YoY growth turned positive after five consecutive quarters of YoY decline. Per ACG, export orders are secured until December 2024, with the production line for export products operating at 110% capacity.
- GPM continued its upward trend in Q2 2024, reaching 32.5%, attributed to both domestic and exports demand recovery. This marks the fifth consecutive quarter of GPM improvement since Q1 2023 (excluding Q4 2023). In Q2, the GPM of exports expanded to 30.6% from 24.7% in Q1 2024 and 24.1% in Q2 2023, which we attribute to ACG’s shift towards selling higher-margin products and reduced customer acquisition costs as adoption of ACG products increased.
- H1 2024 SG&A expenses declined YoY: H1 2024 total SG&A expenses declined 15% YoY, with SG&A/revenue ratio narrrowing to 17.2% from 21.1% last year. In Q2, SG&A/revenue declined to 14.2% from 21.7% in Q1 2024 and 18.1% in Q2 2023. We attribute this development to (1) ACG having completed expanding its distribution network and (2) cost optimization efforts amid a challenging market.
- “Other expenses” surged to VND52bn (USD2mn) in Q2 2024 due to late VAT tax payment-related expenses: During Q2 2024, ACG conducted a review of expenses incurred during 2014 to 2023 and excluded those with invoices not meeting the conditions for VAT deduction (i.e., not qualified for tax deductions). From our understanding, this review revealed that ACG had previously enjoyed tax deductions they were not eligible for, resulting in two significant expenses classified in “Other expenses”, including (1) repayment of non-deductible VAT of VND11.6bn (USD0.5mn) and (2) interest payment of VND42.6bn (USD1.7mn) for additional taxes accumulated over 2014-2023.
Overall, we foresee insignificant changes to our forecast for ACG’s EBIT as H1 2024 results came broadly in-line with our expectations and we anticipate H2 2024 demand to be stronger than in H1. However, we see downside risk to our NPAT-MI forecast due to the unexpected expenses related to the late VAT tax payment incurred in Q2 2024.
ACG’s H1 2024 results
VNDbn | Q2 2023 | Q1 2024 | Q2 2024 | QoQ | YoY | H1 2023 | H1 2024 | YoY | 2024F | H1 as % of 2024F |
Net revenue | 968 | 695 | 1,026 | 48% | 6% | 1,648 | 1,721 | 4% | 3,902 | 44% |
- Domestic | 825 | 554 | 833 | 50% | 1% | 1,399 | 1,387 | -1% | 3,236 | 43% |
- Direct exports | 144 | 141 | 193 | 37% | 34% | 249 | 334 | 34% | 667 | 50% |
Gross profit | 280 | 214 | 333 | 56% | 19% | 470 | 547 | 16% | 1,195 | 46% |
- Domestic | 245 | 179 | 274 | 53% | 12% | 422 | 453 | 7% | 1,035 | 44% |
- Direct exports | 35 | 35 | 59 | 69% | 71% | 49 | 94 | 93% | 160 | 59% |
Selling expenses | -128 | -112 | -110 | -2% | -15% | -264 | -221 | -16% | -529 | 42% |
G&A expenses | -47 | -39 | -36 | -7% | -23% | -84 | -75 | -10% | -170 | 44% |
EBIT | 104 | 63 | 187 | 195% | 80% | 122 | 251 | 105% | 496 | 51% |
Financial income | 38 | 46 | 44 | -4% | 17% | 78 | 90 | 15% | 193 | 47% |
Financial expense | -13 | -10 | -11 | 17% | -12% | -29 | -21 | -27% | -41 | 52% |
Others | 5 | 2 | -52 | N.M. | N.M. | 10 | -50 | N.M. | 13 | N.M. |
PBT | 134 | 101 | 168 | 66% | 25% | 182 | 269 | 48% | 661 | 41% |
NPAT-MI | 107 | 81 | 118 | 45% | 10% | 144 | 200 | 39% | 529 | 38% |
GPM | 28.9% | 30.8% | 32.5% |
|
| 28.5% | 31.8% |
| 30.6% |
|
- Domestic | 29.7% | 32.3% | 32.9% |
|
| 30.1% | 32.7% |
| 32.0% |
|
- Direct exports | 24.1% | 24.7% | 30.6% |
|
| 19.5% | 28.1% |
| 24.0% |
|
SG&A/revenue | 18.1% | 21.7% | 14.2% |
|
| 21.1% | 17.2% |
| 17.9% |
|
EBIT margin | 10.8% | 9.1% | 18.3% |
|
| 7.4% | 14.6% |
| 12.7% |
|
EBITDA margin | 13.5% | 12.8% | 20.7% |
|
| 10.6% | 17.5% |
| 15.6% |
|
NPAT-MI margin | 11.1% | 11.7% | 11.5% |
|
| 8.7% | 11.6% |
| 13.6% |
|
Source: ACG, Vietcap
Powered by Froala Editor