VHM announced strong Q1 2023 NPAT-MI of VND11.9tn (USD504mn; +162% YoY), which we mainly attribute to (1) handovers at Vinhomes Ocean Park 2 and (2) the recognition of bulk sales transactions at Vinhomes Ocean Park 2 & 3 with a total pre-tax gain of VND8.5tn (USD362mn) that accounted for 56% of VHM’s Q1 2023 PBT, per management. As this Q1 2023 result fulfilled 36% of our 2023F NPAT-MI of VND33.0tn (USD1.4bn; +15% YoY), we foresee potential upside risk to our forecast, pending a fuller review.

VHM’s underlying property sales (including business cooperation contract (BCC) and bulk sales transactions recognized as financial income) amounted to VND40.2tn in Q1 2023 (USD1.7bn; +3.6x YoY), which was supported by (1) the delivery of 2,600 units at Ocean Park 2 and (2) bulk sales transactions worth VND11.4tn (USD483mn). Q1 2023 adjusted gross margin (including BCC and bulk sales transactions) was 38.4% (vs 49.7% in Q1 2022) as the majority of delivered units at Ocean Park 2 in Q1 2023 were under BCC, from which VHM shared profit with the BCC partners upon handover. Management expects gross margin will improve in future quarters.

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