VHM posted Q2 2021 results with net revenue growing 75% YoY to VND28.7tn (USD1.25bn) and NPAT-MI surging 198% YoY to VND10.2tn (USD445mn). These results were mainly driven by the handovers of ~11,400 units mostly at the three current mega projects — especially the low-rise component Manhattan at Vinhomes Grand Park. As such, VHM recorded strong H1 2021 results with net revenue increasing 82% YoY to VND41.7tn (USD1.8bn) and NPAT-MI growing 52% YoY to VND15.6tn (USD680mn). As H1 2021 was mostly in line with our expectation, we anticipate no significant change to our 2021F NPAT-MI forecast of VND30.1tn (USD1.3bn; +10% YoY) as stated in our last Update Report, VHM [BUY +28.8%] - Expect pre-sales to accelerate in 2021, dated May 24, 2021, pending for a fuller review.

Profit recognition from Ocean Park and Grand Park supported H1 2021 earnings. VHM delivered ~7,300 retail units in H1 2021 — mainly condominium units at Ocean Park and villa and shophouse units at the Manhattan (Grand Park’s low-rise component). H1 2021 also included (1) a bulk sales transaction at Ocean Park for revenue of VND2.9tn (USD126mn) in Q1, (2) the remaining portion of the bulk sales transaction to Mitsubishi Nomura at Grand Park for a sales value of VND2.4tn (USD104mn) in Q1, and (3) a bulk sales transaction at Grand Park for revenue of VND5.6tn (USD255mn) in Q2. We estimate bulk sales transactions at Ocean Park and Grand Park contributed a total of ~VND7.2tn (USD313mn) or ~36% of VHM’s H1 2021 profit before tax. 

Modest pre-sales growth in H1 2021. In Q2 2021, VHM recorded total pre-sales of VND21.7tn (USD945mn), including two bulk sales transactions at Ocean Park and Smart City that amounted to VND6.7tn (USD290mn) and VND6.5tn (USD265mn), respectively. Management shared that VHM is discussing several additional bulk sales transactions with different institutional buyers — even for upcoming mega projects (Wonder Park, Dream City and Co Loa) with a large value of contracts under negotiation. VHM’s H1 2021 total pre-sales reached VND27.7tn (USD1.2bn; -26% YoY) and fulfilled 31% of our 2021F forecast of VND90tn (USD3.9bn; +40% YoY). Per management, the end-Q2 2021 backlog was VND49.4tn (USD2.15bn; -47% YoY) with the Smart City, Ocean Park and Grand Park mega projects accounting for 32%, 31% and 29%, respectively. Management reaffirmed its confidence to achieve the company’s 2021 pre-sales guidance of VND91tn (USD4.0bn) with several bulk sales transactions along with launches of new mega projects in H2; however, VHM had to adjust to the social distancing order as a result of the ongoing COVID-19 situation in Vietnam. Nevertheless, we anticipate downside risk to our pre-sales value forecast — pending a fuller review — as the recent COVID-19 disruption is challenging the launch plans of the three new mega projects set toward year end, in our view.