- 2024-05-03T00:00:00
- Company Research
• HVN reported Q1 2024 net revenue of VND28tn (USD1.1bn; +19% YoY). The company's Q1 2024 NPAT-MI was VND4.4tn (USD175mn), compared to the loss of VND104bn in Q1 2023. The revenue for Q1 2024 accounted for 24.4% of our full-year 2024 projection of VND115.6tn. Additionally, Q1 2024 NPAT-MI exceeded our full-year 2024 forecast of a loss of VND1.3tn. We see potential upside to our current projection, pending a more comprehensive review.
• Vietnam Airlines’ (VNA) standalone revenue increased 24.2% YoY to VND22.1tn (USD875mn) in Q1 2024. In addition, HVN’s subsidiaries' revenue increased by 5.3% YoY to VND6.1tn (USD241mn). Transportation revenue increased 24.6% YoY to VND21.9tn (USD864mn) and total auxiliary revenue slightly decreased by -1.4% YoY to VND276bn (USD11mn).
• Q1 2024 gross profit was VND4.1tn (USD161mn), a significant 108.5% increase from Q1 2023 of VND1.9tn; this is the highest gross profit for HVN since 2015. As HVN does not disclose its cost breakdown at the consolidated level, we look at the cost breakdown at the standalone level (VNA) to analyze the improvement in HVN's GPM. VNA’s GPM improved from 8.6% in Q1 2023 to 15.7% in Q1 2024. We see that while VNA’s outsourcing costs grew by 25.8% YoY, roughly in line with the growth in transportation revenue (+24.6% YoY), growth of other cost components was slower than revenue. Specifically, raw materials costs, labor costs, and depreciation costs grew by 14.5%, 13.2%, and -29.6% YoY, respectively. We note that outsourcing costs accounted for 54.6% of the total cost, while raw materials costs, labor costs, and depreciation costs accounted for 33.3%, 6.6%, and 6% of Vietnam Airlines' (VNA) total costs in Q1 2023, respectively.
• HVN’s operating profit was VND2.2tn (USD86mn) in Q1 2024, five times higher than Q1 2023. Operating margin improved from 1.8% in Q1 2023 to 7.8% in Q1 2024, significantly outperforming our 2024 forecast of 0.8%. The improvement in HVN’s Q1 2024 operating margin was mainly driven by gross margin expansion, as the airline’s SG&A expenses surged 24.7% YoY — slightly higher than the 19.6% YoY jump in its top line.
• In Q1 2024, financial income decreased by 62.6% YoY to VND137bn (USD5mn), while financial expenses increased by 90.2% YoY to VND1.5tn (USD58mn).
• HVN recorded a net other income of VND3.6tn (USD143.4mn) in Q1 2024, which is significantly higher than the loss of VND38bn (USD1.5mn) in Q1 2023. This income accounted for 80% of the profit before tax (PBT). The substantial increase can be primarily attributed to (1) VND568bn in asset sales at VNA and (2) the cancellation of a debt totaling VND3tn at the consolidated level, which we attribute to the cancellation of payables to lessors at Pacific Airlines.
HVN’s Q1 2024 results
VND bn | Q1 2023 | Q1 2024 | YoY | 2024F | Q1 as % 2024F |
Gross Revenue | 23,640 | 28,268 | 19.6% | 115,638 | 24.4% |
- VNA | 17,835 | 22,156 | 24.2% | 89,763 | 24.7% |
Transportation revenue | 17,555 | 21,880 | 24.6% | 87,319 | 25.1% |
Total auxiliary | 280 | 276 | -1.4% | 2,445 | 11.3% |
- Subsidiaries | 5,805 | 6,112 | 5.3% | 25,875 | 23.6% |
Net Revenue | 23,494 | 27,964 | 19.0% | 114,830 | 24.4% |
Gross Profit | 1,959 | 4,084 | 108.5% | 8,060 | 50.7% |
SG&A | -1,528 | -1,906 | 24.7% | -7,131 | 26.7% |
Operating Profit | 431 | 2,178 | 405.3% | 929 | 234.4% |
Financial income | 366 | 137 | -62.6% | 361 | 38.0% |
Financial expense | -773 | -1,470 | 90.2% | -2,859 | 51.4% |
Gain/loss from associates | 35 | 55 | 59.9% | 75 | 73.8% |
Net other income | -38 | 3,627 | N.M. | 109 | 3331.1% |
PBT | 19 | 4,528 | 23,361% | -1,385 | N.M. |
NPAT-MI | -104 | 4,434 | N.M. | -1,347 | N.M. |
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GPM | 8.3% | 14.6% |
| 7.0% |
|
OPM | 1.8% | 7.8% |
| 0.8% |
|
NPM | -0.4% | 15.9% |
| -1.2% |
|
SG&A / Revenue | 6.5% | 6.8% |
| 6.2% |
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Source: HVN, Vietcap
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