ACV – Bad debt provisions cool down; FX losses weigh on earnings - Earnings Flash
  • 2024-10-31T00:00:00
  • Company Research
  • ACV released its 9M 2024 results, posting a 12% YoY increase in revenue and a 27% YoY increase in PBT, adjusted for FX gains/losses. We note that ACV’s earnings reached a record-low in Q3 and Q4 2023 due to a large bad debt provision of VND674bn (USD27mn) and VND1.2tn (USD48mn).
  • Overall, 9M 2024 revenue and NPAT-MI fulfill 69% and 67% of our respective full-year forecasts. We foresee insignificant changes to our forecasts, pending a fuller review.
  • In 9M 2024, international passenger numbers surged 30% YoY, totaling 30.5 million, in line with our full-year forecast of 45 million. Typically, Q4 is the high season for international passengers, with an average contribution of 31% to the full-year total number of passengers.
  • Foreign arrivals fully recovered in 9M 2024, reaching 99% of the pre-COVID-19 levels, with Chinese arrivals achieving 68%. We expect the recovery of foreign arrivals to continue, with a higher recovery rate of Chinese arrivals in Q4 2024 and 2025.
  • In constrast, in 9M 2024, domestic passenger numbers dropped 18% YoY to 52.8 million, trailing our expectation of 74.2 million, due to high airfares. We expect high airfares to ease gradually as domestic airlines complete aircraft repairs and fuel costs decrease. Additionally, an improvement in customer purchasing power should support a recovery in domestic passengers.
  • In Q3 2024, ACV recognized an increase of VND54bn (USD2.2mn) in bad debt provisions, resulting in a total provision balance of VND3.9tn (USD156mn; +1% QoQ) as of Q3 2024. For 9M 2024, ACV booked VND220bn (USD8.8mn) in bad debt provisions, which is lower than our expectation of VND600bn (USD24mn) for 2024F. We attribute this to the positive recovery of domestic airlines and ACV’s effective strategy to prevent the emergence of new receivables.
  • ACV incurred FX losses of VND792bn (USD32mn) in Q3 2024 due to an 8% appreciation in the JPY/VND exchange rate, hurting ACV’s JPY debt load. This outweighed VND540bn (USD22mn) of FX gains during H1 2024.

ACV’s 9M 2024 results

VND bn

Q3 2023

Q2 2024

Q3 2024

QoQ

YoY

9M 2023

9M 2024

YoY

9M 2024 as % of 2024F

2024F

Net revenue

5,328

5,535

5,655

2%

6%

14,985

16,834

12%

69%

24,572

Aeronautical revenue

3,737

3,862

3,970

3%

6%

10,452

11,794

13%

68%

17,238

Take-off and landing fees

682

682

715

5%

5%

1,932

2,089

8%

72%

2,911

Non-aeronautical revenue

927

1,008

988

-2%

7%

2,652

3,001

13%

69%

4,361

ACV’s net revenue *

4,664

4,869

4,957

2%

6%

13,104

14,795

13%

68%

21,662

Gross profit

3,331

3,460

3,642

5%

9%

9,228

10,702

16%

68%

15,650

SG&A

-1,009

-332

-385

16%

-62%

-2,287

-1,214

-47%

62%

-1,949

EBIT

2,322

3,128

3,258

4%

40%

6,941

9,487

37%

69%

13,701

Financial income

995

827

294

-64%

-70%

1,853

1,600

-14%

100%

1,602

Financial expenses

-20

-27

-809

2944%

3936%

-366

-855

133%

529%

-162

Net income from associates

113

81

134

66%

19%

245

276

13%

87%

318

PBT

3,414

3,999

2,878

-28%

-16%

8,680

10,506

21%

68%

15,501

PBT adj. for FX 

2,920

3,576

3,662

2%

25%

8,489

10,766

27%

70%

15,401

NPAT

2,764

3,228

2,339

-28%

-15%

7,010

8,488

21%

67%

12,721

NPAT-MI

2,763

3,225

2,336

-28%

-15%

7,003

8,479

21%

67%

12,683

      ACV’s NPAT-MI

2,415

2,898

1,978

-32%

-18%

6,012

7,469

24%

66%

11,275

      State’s NPAT-MI **

348

327

358

10%

3%

992

1,009

2%

72%

1,408

D&A

609

573

562

-2%

-8%

1,774

1,721

-3%

67%

2,565

EBITDA

2,931

3,700

3,819

3%

30%

8,715

11,208

29%

69%

16,267

GPM

62.5%

62.5%

64.4%

 

 

61.6%

63.6%

 

 

63.7%

SG&A/rev

-18.9%

-6.0%

-6.8%

 

 

-15.3%

-7.2%

 

 

-7.9%

EBITDA margin

55.0%

66.9%

67.5%

 

 

58.2%

66.6%

 

 

66.2%

NPM *

51.8%

59.5%

39.9%

 

 

45.9%

50.5%

 

 

52.0%

Source: ACV, Vietcap forecast. Note: (*) Excluding contribution from State-invested aviation assets;
 (**) NPAT-MI from assets owned by the State (State-invested aviation assets) — the State authorizes ACV to manage these assets (including runways).

ACV’s accounts receivable as of Q3 2024 (VND bn)

VND bn

Total

Gross doubtful receivable

Net doubtful receivable

All clients

11,363

8,844

4,899

Vietjet Air

3,031

2,242

2,212

Bamboo Airways

2,340

2,340

0

Vietnam Airlines

3,745

2,989

2,686

Pacific Airlines

888

888

0

Source: ACV

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