GEX announced its Q4 2023 results with revenue of VND8.1tn (+10% YoY) and net loss of VND20bn vs net profit of VND73bn in Q4 2022. The divergence between the top-line and bottom-line  growth can be primarily attributed to (1) a significantly lower gross profit margin (GPM) of the construction materials segment (7.4% in Q4 2023 vs 16.5% in Q4 2022) amid the sector’s slowdown and (2) a 37% YoY jump in G&A expenses mainly due to an allocation for a science and technology  fund in Q4 2023, per GEX. We note that while revenue and gross profit from construction materials experienced sharp YoY declines in Q4 2023, those of electrical equipment increased 32% and 24% YoY, respectively, last quarter. On a QoQ basis, electrical equipment’s Q4 2023 revenue and gross profit also improved 14% and 25%, respectively, signaling a gradual sector recovery.

In 2023, GEX recorded revenue of VND30tn (-7% YoY) and reported NPAT-MI of VND331bn (-10% YoY), which are equivalent to 102% and 66% of our respective forecasts. Meanwhile, GEX’s 2023 recurring NPAT-MI achieved 84% of our full-year projection. We attribute the YoY decline in reported NPAT-MI to the weak performance from construction materials and real estate, as well as financial income slumping 38% YoY mainly due to lower interest income. These factors outweighed (1) 51% YoY higher gross profit from the IP leasing & services segment, (2) lower financial expenses due to no losses from securities investments in Q4 2023 vs VND265bn in Q4 2022, and (3) significantly lower minorities interest primarily driven by weak results from GEX’s construction materials companies. We note that the 2023 GPM of GEX’s IP leasing & services segment expanded to 44.6% from 34.3% in 2022.

GEX’s 2023 NPAT-MI trailed our projection due to lower-than-expected gross profits from the IP leasing & services and construction materials segments, which completed 83% and 92% of our respective full-year forecasts, in addition to higher-than-expected G&A expenses.

VGC recorded 2023 revenue of VND13.2tn (-10% YoY) and reported NPAT-MI of VND1.2tn (-30% YoY), completing 97% and 85% of our respective projections. The YoY decline in earnings can be primarily attributed to gross profits from construction materials and real estate plunging 56% YoY and 94% YoY, which outweighed 48% YoY higher gross profit from IP leasing & services. Meanwhile, VGC’s 2023 earnings trailed our forecast mainly due to lower-than-expected revenue and gross profit from IP leasing & services and higher-than-expected G&A expenses. According to GEX, VGC leased over 170 ha (+8% YoY) of IP land in 2023 vs our forecast of 209 ha.

• GEE’s 2023 revenue was VND16.6tn (flat YoY) and reported NPAT-MI was VND750bn (-15% YoY), fulfilling 107% and 98% of our respective forecasts. The YoY decrease in earnings is mainly due to lower YoY financial income, which outweighed a 20% YoY decrease in financial expenses. Meanwhile, gross profits from electrical equipment and power slid 1% YoY and 7% YoY, respectively, in 2023.
• We foresee downside risk to our 2024F earnings forecast for VGC and GEX, pending a fuller review, following weaker-than-expected 2023 results. For GEX, we currently forecast 2024F revenue of VND32.4tn and reported NPAT-MI of VND1.4tn. For VGC, we currently project 2024F revenue of VND14.7tn and reported NPAT-MI of VND1.8tn.  

GEX’s Q4 & 2023 results

Source: GEX, Vietcap, (*) Adjusted for one-off items and an allocation for a science & technology fund.

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