We attended NVL’s analyst meeting on February 10, during which management provided a brief update on 2022 business results and the restructuring of the company’s operations and financing arrangements. 

Weak Q4 2022 profit due to fewer project handovers and high tax expenses. NVL’s Q4 2022 net revenue was VND3.2tn (USD137mn; -29% YoY) and NPAT-MI was VND239bn (USD10mn; -71% YoY). We attribute the YoY plummet in NPAT-MI to (1) fewer project handovers, (2) gross profit margin declining from 44.9% in Q4 2021 to 33.6% in Q4 2022 and (3) high effective tax expenses (an effective tax rate of 67.5% in Q4 2022 vs 36.9% in Q4 2021).

For full-year 2022, NVL’s net revenue was VND11.1tn (USD472mn; -25% YoY), which was mainly supported by deliveries at Aqua City, NovaWorld Phan Thiet and NovaWorld Ho Tram. Although operating income (EBIT) declined 47% YoY due to high SG&A expenses, NVL’s NPAT-MI declined to 30% YoY to VND2.3tn (USD96mn), which was supported by financial income increasing YoY to VND5.0tn (USD212mn) mainly from divestment gains in Q2-Q3 2022 and income of investment cooperation contracts.