• We attended HDG’s annual general meeting (AGM) on April 27, 2024. Overall, management is confident in achieving its 2024 guidance. 
• The Board of Directors (BOD) shared its strategy and business plan for the 2024-2028 period, focusing on three main areas: real estate investment (adding industrial parks business, 900 hectares), energy (focusing on developing 800 MW wind power), and financial investment. Additionally, the Chairman wants to gradually delegate authority to the next generation to ensure the sustainable development of the Hado Group without an over-reliance on any individual. Accordingly, the AGM approved adding two new members: Ms. Tran Thi Quynh Anh and Mr. Nguyen Hoang Trung, bringing relevant expertise to support the group's activities in the industrial parks sector (targeting FDI customers) and financial investments.
• Management addressed legal risks of the Hong Phong solar farm and Bao Dai projects which they believe are minimal as Hong Phong solar farm continues to get mobilized and payment from EVN. In addition, they expect legal procedures (bidding & auction method) of the Minh Long, Green Lane, and Phan Dinh Giot projects to be completed in 2025 to help the sales launch in 2026, one year later than our forecast.
• Shareholders approved to pay 2023 cash dividends of VND500/share and stock dividends of 10% vs our forecast for zero cash dividends. HDG set its 2024 dividends of 15% on par value (which might be split between cash and stock, or purely a stock dividend, to be decided in 2025 AGM). 
• HDG set its 2024 business guidance with flat revenue of VND2.9tn (+0% YoY) and NPAT before MI of VND972bn (+12% YoY), fulfilling 91%/97% of our respective full-year forecasts. The divergence in its top-line guidance vs our forecast due to the management's conservative assumptions on revenue of both the energy and office leasing & hotel segments while the guidance for the real estate segment is broadly in line with our forecast. On the other hand, NPAT is broadly in line with our expectation, which could be due to its higher margin expectation. We note that HDG has surpassed its NPAT guidance by 9% over the last five years on average. 
• HDG announced its Q1 2024 results with revenue of VND848bn (-11% YoY) and NPAT-MI of VND221bn (-27% YoY), fulfilling 27%/27% of our respective full-year forecasts. 
• We see insignificant changes to our 2024F earnings forecast (NPAT-MI of VND829bn, +25% YoY), pending a fuller review, as a potential lower-than-expected financial expense might offset slightly lower gross profit from the real estate segment. However, we see a slight downside risk to our long-term earnings forecast due to slow progress of residential real estate projects which might outweigh upside potential coming from new energy projects and industrial park projects.
• We currently have an OUTPERFORM rating for HDG with a target price of VND30,200/share.

2024 real estate revenue is guided at VND1.0tn (+3.5x YoY), completing 102% of our full-year forecast, mainly due to the recognition of sales from Charm Villas – phase 3 in H2 2024. HDG will focus on acquiring new residential projects during 2024-2025 due to its strong cash position and stable cashflow from the energy segment while there will be no new residential sales launch in 2025 aside from Charm Villas. On March 15, 2024, HDG secured an MoU with the Kien Giang provincial authorities to develop an urban area complex of 99 ha, with investment capital of VND3tn. Regarding industrial parks, HDG is currently conducting research and investment procedures for three IP projects ~ 900 ha (in Ninh Thuan and Hung Yen). 

In Q1 2024, real estate gross profit decreased slightly by 5% YoY to VND121bn, completing 19% of our full-year forecast. HDG’s management plans to launch the sales of Charm Villas – phase 3 in H2 2024, in line with our expectation, but the launch faces a potential delay if they want to achieve higher selling prices ~ VND130-140mn/sqm vs our projection of VND90mn/sqm. We believe VND100-120mn/sqm (with some discounts) is more feasible.

2024 power revenue guidance is at VND1.6tn (-17% YoY), 93% of our full-year forecast, mainly due to the higher contracted sales volume for hydropower at 98% vs 90% in the previous year, as per industry players. HDG wants to prioritize hydropower, especially through M&A activities, while it currently has an 828 MW wind power portfolio for development. Specifically, the 7A wind farm phase 2 (21MW) and Phuoc Huu 50 MW (Ninh Thuan) wind farm plan to CoD in 2025 and Binh Gia 80 MW (Lang Son) wind farm plans to be operational in 2026-2027 after receiving the investment memorandum and completing 14 months of wind measurement. These give upside to our long-term revenue projection.

In Q1 2024, energy revenue and gross profit decreased 24%/33% YoY, fulfilling 24%/ 27% of our respective full-year forecasts, mainly due to the low mobilization of hydropower to reserve water for the dry season. 

2024 office leasing & hotel revenue is guided at VND300bn (-31% YoY), fulfilling 65% of our full-year forecast of VND461bn (+5% YoY), which we believe is mainly due to management’s conservative assumption.

In Q1 2024, office leasing & hotel recorded flat YoY gross profit of VND51bn, achieving 25% of our full-year forecast. 

Other takeaways:

HDG’s management explained the 6% lower 2023 audited NPAT-MI vs unaudited was mainly due to VND60bn of costs incurred from wind speed measurement activities at 12 potential wind power projects as well as some solar projects, and VND20bn of provisions for bad debt.

New BOD member - Ms. Tran Thi Quynh Anh. Ms Quynh Anh graduated from Hanoi Law University and used to be assistant to HDG’s CEO in 2006-2007. Currently, she is General Director of D&A International Ltd. Co. (a company specializing in attracting foreign investments and supporting Vietnam’s exports & imports). She is also the Regional Director for Petrichor Capital SND BHD – Malaysia (Petrichor Capital & Trading leverages its extensive financial services network coupled with its trading expertise to add value to manufacturers and end customers).

New BOD member - Mr. Nguyen Hoang Trung. Mr. Trung graduated from Monash University – Australia, specializing in finance banking. Mr. Trung joined HDG in 2016 and has been Deputy Manager of the finance department since 2022.

HDG’s Q1 2024 & 2023 results 

 Source: HDG, Vietcap

Powered by Froala Editor