- LHG released Q2 2022 results with revenue plunging 58% YoY to VND233bn (USD10mn) and NPAT-MI plummeting 81% YoY to VND41bn (USD1.8mn). We note that Q2 2021 was a high base when LHG recorded its highest quarterly profit since listing thanks to delivering around 10 ha to major tenant LOGOS, which is a warehousing developer.

- Notably, IP land sales’ GPM in Q2 2022 was only 18% vs 61% in Q1 2022. We believe the abnormally low GPM in Q2 2022 was due to recording a nonrecurring upward cost revision for the accumulated leased area of the Long Hau 3.1 (LH3.1) IP in the quarter following development cost revision approved by shareholders at LHG’s April 2022 AGM, pending for fuller comments from LHG. In H1 2022, GPM of IP land sales was 28% vs 55% in H1 2021.

- In H1 2022, revenue declined 48% YoY to VND348bn (USD15mn) and NPAT-MI plunged 64% YoY to VND90bn (USD3.9mn), completing 40% and 28% of our full-year forecasts, respectively. We see potential downside risks to our 2022F profit forecasts due to lower-than-expected GPM from IP land sales in H1 2022. We note that LHG has not released details in terms of IP land sales area and average selling price (ASP) for the period.

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