NVL announced Q3 2022 results with net revenue of VND3.3tn (USD134mn; flat YoY) mainly thanks to handovers of Aqua City, NovaWorld Phan Thiet, NovaWorld Ho Tram and NovaHills Mui Ne. In Q3 2022, NVL’s financial income increased to VND1.6tn (USD64mn), which was primarily due to a divestment gain of VND727bn (USD30mn) from selling stakes in Saigon Housing and Infrastructure, Khanh An and Carava Resort. Meanwhile, NVL’s financial expenses surged YoY mainly because of foreign exchange (FX) losses of VND448bn (USD18mn) in Q3 2022.  While Q3 2022 PBT declined 18% YoY, the quarter’s NPAT-MI of VND197bn (USD8mn) plummeted 65% YoY, which we attribute to higher tax expenses (an effective tax rate of 67.9% in Q3 2022 vs 40.2% in Q3 2021).

For 9M 2022, NVL’s net revenue of VND7.9tn (USD322mn; -23% YoY) and NPAT-MI of VND2.0tn (USD83mn; -16% YoY) fulfilled 27% and 29% of our full-year forecasts, respectively. Therefore, we foresee downside risk to our 2022F forecasts, pending a fuller review. In addition, management shared that NVL may not achieve its 2022 guidance that was approved at the company’s AGM for NPAT of VND6.5tn (USD265mn; +88% YoY) as it expects project handovers to be delayed mainly because of the financial rearrangements of buyers.

As of end-Q3 2022, NVL’s total debt was VND71.7tn (USD2.9bn) — 42% of which will mature in the next 12 months. Per management, as NVL’s debt is funded for project development, the debt repayment that is coming due will be partly supported by cashflow from project presales. The cashflow from presales amounted to ~VND25tn (USD1bn) in 9M 2022 and is expected to increase by VND10tn (USD408mn) in Q4 2022 to a total of VND35tn (USD1.4bn) for the full-year 2022, according to management. Meanwhile, NVL’s USD-denominated debt accounted for 24% of its total debt as of end-Q3 2022 with an average hedging ratio of ~30%. As a result of current foreign exchange rate fluctuations, NVL’s management is considering to increase this hedging ratio.

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