HDG – Solid Q4 results; 2023 earnings in line with forecast – Earnings Flash
  • 2024-01-31T00:00:00
  • Company Research

HDG announced its Q4 2023 results with revenue of VND862bn (-25% YoY) and reported NPAT-MI of VND289bn (+16% YoY). The divergence between the top line and bottom line growth can be primarily attributed to higher gross profit from the real estate segment at VND42bn in Q4 2023 (despite lower YoY revenue) vs a gross loss of VND6bn in Q4 2022. We believe that this was due to HDG booking additional land costs for the Charm Villas project in Q4 2022. Additionally, financial expenses dropped 20% YoY in Q4 2023 mainly due to a lower interest expense.

In 2023, HDG recorded revenue of VND2.9tn (-20% YoY) and reported NPAT-MI of VND712bn (-35% YoY), which are equivalent to 96% and 99% of our respective forecasts. We attribute the YoY decline in the bottom line to (1) real estate gross profit slumping 70% YoY amid the sector slowdown in 2023 (HDG handed over ~25 units of Charm Villas in 2023 vs 112 units in 2022) and (2) power gross profit dropping 14% YoY mainly due to 16% YoY lower hydropower sales volume. Moreover, HDG’s financial income fell 52% YoY while financial expenses climbed 11% YoY, which we believe was primarily due to higher FX loss and other financial expenses. Meanwhile, HDG’s 2023 earnings were in line with our forecast, with higher-than-expected profit from the power segment and a lower-than-expected tax expense offsetting lower-than-expected profit from the real estate segment.

  • We foresee slight downside risk to our 2024F reported NPAT-MI forecast, pending a fuller review, mainly due to a contracted volume ratio of 98% for HDG’s Dakmi 2 hydropower plant (147 MW or nearly half of HDG’s hydropower capacity) in 2024 vs 90% in 2023. We expect a gradual recovery of the real estate sector in 2024, which should support HDG’s sales launch of Charm Villas Phase 3. We currently forecast 2024F revenue of VND3.3tn and reported NPAT-MI of VND861bn.

HDG’s Q4 & 2023 results

VND bn

Q4 2022

Q4 2023

 YoY

 2022

2023

 YoY

% of Vietcap’s 2023F

Revenue

1,149

862

-25%

3,581

2,882

-20%

96%

  Real estate 

347

99

-72%

1,143

282

-75%

77%

  Energy 

698

643

-8%

2,161

1,939

-10%

99%

  Office leasing & hotel

109

117

8%

369

421

14%

97%

  Construction & others

-5

2

N.M

-93

240

-359%

101%

Gross profit

613

586

-4%

2,212

1,716

-22%

98%

  Real estate 

-6

42

N.M

553

163

-70%

74%

  Energy 

568

486

-14%

1,557

1,336

-14%

102%

  Office leasing & hotel

68

60

-12%

179

193

8%

98%

  Construction & others

-12

-2

N.M

-78

23

-130%

92%

Selling exp

-2

-2

50%

-5

-8

78%

56%

G&A

-52

-49

-7%

-159

-171

7%

97%

Operating profit

559

535

-4%

2,049

1,537

-25%

99%

Financial income

13

13

3%

83

40

-52%

111%

Financial expenses

-193

-155

-20%

-517

-572

11%

104%

   In which, interest expense

-136

-111

-18%

-501

-489

-2%

96%

Other non-operating income

-3

11

-411%

-10

2

N.M.

N.M

PBT

376

403

7%

1,604

1,007

-37%

97%

  - Income tax exp

-38

-31

-109%

-243

-101

-58%

80%

NPAT before MI

338

373

10%

1,362

906

-33%

99%

  - Minority interest

-90

-84

-7%

-266

-194

-27%

98%

NPAT-MI

248

289

16%

1,096

712

-35%

99%

Source: HDG, Vietcap

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