- We downgrade our rating for NLG to MARKET PERFORM from OUTPERFORM as its share price has increased 17% over the last three months due to H1 2021’s positive pre-sales performance and recent approval from authorities to proceed with NLG’s private placement plan.
- We trim our target price by 2% to VND43,000/share mainly due to factoring in the private placement of 60 million shares at our assumed issue price of VND34,000/share, which should be completed in August 2021. At our target price, NLG will be valued at a 2021/22F P/E of 12.5x/13.5x based on our forecasts, which is relatively high comparable multiple range for NLG in the last three years with modest three-year earnings growth forecast.
- H1 2021 earnings performance was in line with our expectation with the recognition of Waterfront’s non-cash revaluation gain and ongoing handovers at Southgate P1. We maintain our 2021F NPAT-MI forecast for NLG at VND1.1tn (USD48.5mn; +34% YoY) as we expect earnings to accelerate in H2 2021 with the scheduled handovers of Akari City P1 (estimated to start in September 2021).  
- We raise our 2021F pre-sales value forecast by 2% to VND7.0tn (USD303mn; +83% vs 2020’s low base) in accordance with the H1 2021 results of Akari City P1. We continue to expect key contributors for H2 2021 pre-sales will include ongoing pre-sales at Mizuki Park P2 and Southgate P1 as well as the launch of Waterfront (new commercial name is Izumi City).
- Upside catalysts: Higher-than-expected selling prices for Izumi City; sooner-than-expected launch of Waterpoint P2.
- Downside risk: Prolonged COVID-19 disruption to delay sales launches of key projects.

Handovers at Akari City P1 set to be on track for H2 2021. As construction of Akari City P1 was mostly completed (link to updated progress) before HCMC recently tightened measures on construction sites amid escalating COVID-19 cases, we continue to expect NLG could begin the handover progress in September 2021. As such, we maintain our projection for ~800 Akari units to be delivered in 2021F, supporting our forecast for NLG’s 2021F NPAT-MI of VND1.1tn (USD48.5mn; +34% YoY; unchanged vs our previous forecast).

Private placement to be completed in Q3 2021, supporting NLG’s medium-term growth outlook. NLG received paperwork approval from authorities to proceed with its private placement plan at end-July 2021 (per management). As such, we expect the company will collect estimated cash proceeds of ~VND2.0tn (USD89mn) in H2 2021. Coupled with Q1 2021 sales of treasury shares worth ~VND600bn (USD26mn), we estimate NLG could invest up to ~VND2.5tn-3.0tn (USD110mn-130mn) in acquiring new land bank, supporting the launch of Izumi City and/or developing Waterpoint P2. These developments could be a potential upside catalyst for NLG’s medium-term growth outlook in pre-sales and earnings. Nevertheless, we forecast NLG’s EPS CAGR for 2020-2023F at 3% vs our previous forecast of 9% as we factor in the private placement (60 million shares — equivalent to 21% of the current share count) while mostly maintaining our NPAT-MI forecasts.