NLG - Q3 NPAT-MI growth supported by YoY increase in handovers and deferred tax

- NLG’s Q3 2023 underlying property revenue (including revenue from the joint-venture Mizuki Park project) was VND1.3tn (USD54.6mn; -13% QoQ but +52% YoY) and its NPAT-MI was VND66bn (USD2.8mn; +8.4x YoY). The growth of NPAT-MI was primarily supported by two factors: (1) scheduled deliveries at the Mizuki Park and Southgate projects, and (2) a YoY increase in deferred tax.

- In 9M 2023, NLG’s underlying property revenue was VND4.3tn (USD179mn; +1.7x YoY), fulfilling 75% of our full-year forecast. The deliveries at Mizuki Park and Southgate accounted for 68% and 30% of 9M 2023 total underlying property revenue, respectively. NLG’s NPAT-MI increased by 63% YoY to VND194bn (USD8.1mn) in 9M 2023, completing 32% of our full-year forecast.

- We currently anticipate NLG’s ongoing handovers and Paragon stake sales recognition to drive Q4 2023F earnings. However, according to management, NLG is still waiting for approval from the Dong Nai authority to update the ownership title of the foreign buyer in its enterprise registration certificate; this is the final procedure needed to recognize the 25% stake sale of Paragon to the foreign buyer, Nishi Nippon Railroad. The slower process for this stake sale recognition may cause potential downside risk to our 2023F NPAT-MI forecast of VND605bn (USD25mn; +9% YoY), pending a more comprehensive review.