HVN – Q4 2023 gross margin returns to negative territory - Earnings Flash
  • 2024-02-01T00:00:00
  • Company Research
  • HVN announced its 2023 results with net revenue of VND91.5tn (USD3.7bn; +30% YoY) and net loss of VND5.8tn (USD236.4mn) which was 49% lower than the loss in 2022. The net revenue rebound is broadly in line with our expectation, fulfilling 107% of our full-year forecast. 
  • In Q4 2023, net revenue was VND23.8tn (USD970.3mn; 24% YoY & 1.1% QoQ). Q4 net loss was VND2.1tn (USD84.1mn), vs the loss of VND3.5tn (USD142.8mn) in Q4 2022 and VND2.3tn (-USD92.7mn) in Q3 2023.
  • HVN’s gross revenue grew by 24% YoY in Q4 2023, driven by a 28% YoY rebound in Vietnam Airlines’ (VNA) Q4 transportation revenue (73% of Q4 2023’s gross revenue) thanks to a strong recovery of the international segment. 
  • In Q4 2023, gross profit was -VND189bn (-USD7.7mn), vs -VND1.1tn (-USD43.9mn) in Q4 2022 and VND1.2tn (USD50.5mn) in Q3 2023. We attribute the weak QoQ performance to rising fuel costs and outsourcing expenses. As a breakdown of total costs is not available in HVN’s consolidated reports, we look at VNA’s standalone financial reports, which show fuel costs (34% total costs in Q3 2023) grew by 5% QoQ and outsourcing costs (52% total costs in Q3 2023) grew by 8% QoQ, versus the 1.1% QoQ improvement in net revenue. 
  • In Q4 2023, NPAT-MI loss was VND2.1tn (USD84.1mn), lower than Q3 2023’s net loss of VND2.3tn (USD92.7mn) despite weaker gross profit. We attribute this to a 61% QoQ decrease in financial expense to VND748bn (USD30.4mn), mainly driven by the reduction in FX losses to VND92bn (USD3.7mn) in Q4 2023 from VND1.1tn (USD44.8mn) in Q3 2023.
  • Despite a weak QoQ change in HVN results in Q4 2023, we see upside potential to our 2024 forecast because in our current forecast, we expect HVN’s 2023F gross loss of VND1.2tn (USD47.9mn) vs the actual 2023 gross profit of VND3.9tn (USD160.4mn), due to stronger-than-expected margins recovery.

 HVN’s Q4 and 2023 results 

VND bn

Q4 2022

Q4 2023

YoY

2022

2023

YoY

2023/

Vietcap’s 2023F

Gross revenue

19,406

24,059

24.0%

70,793

92,148

30.2%

106.8%

- VNA

13,868

17,951

29.4%

49,305

69,039

40.0%

112.2%

   Transportation 

13,725

17,578

28.1%

48,459

67,869

40.1%

113.1%

   Total auxiliary 

143

373

160.3%

846

1,170

38.3%

75.0%

- Subsidiaries

5,538

6,107

10.3%

21,488

23,109

7.5%

93.5%

Net revenue

19,303

23,831

23.5%

70,410

91,459

29.9%

106.7%

Gross profit

-1,078

-189

-82.4%

-2,876

3,939

N.M.

N.M.

SG&A

-1,732

-1,565

-9.6%

-4,964

-6,464

30.2%

102.2%

Operating profit

-2,810

-1,754

-37.6%

-7,840

-2,525

-67.8%

33.7%

Financial income

552

287

-48.1%

980

922

-6.0%

83.3%

Financial expenses

-1,156

-748

-35.4%

-4,432

-4,328

-2.4%

172.5%

Gain/loss from associates

-27

11

-139.8%

74

108

45.1%

143.3%

Net other income

69

285

310.2%

273

574

110.3%

58.8%

PBT

-3,372

-1,920

-43.1%

-10,945

-5,249

-52.0%

66.9%

NPAT-MI

-3,508

-2,065

-41.1%

-11,298

-5,807

-48.6%

72.5%

Margins

 

 

 

 

 

 

 

GPM %

-5.6%

-0.8%

 

-4.1%

4.3%

 

 

OPM %

-14.6%

-7.4%

 

-11.1%

-2.8%

 

 

NPAT margin %

-18.2%

-8.7%

 

-16.0%

-6.3%

 

 

Source: HVN & Vietcap

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