VIC – Divestment gain from 55% stake sale in SDI supports Q1 profit – Earnings Flash & Analyst Meeting Note
  • 2024-04-27T00:00:00
  • Company Research
  • VIC announced its Q1 2024 results with NPAT-MI jumping 7.4x YoY to VND7.9tn (USD317mn), mainly driven by the divestment gain of selling a 55% stake in SDI Trading Development and Investment Company Limited (SDI). 
  • As of end-Q1 2024, VIC completed divesting a 55% stake in SDI (SDI effectively owns 41.5% interest in VRE) and fully received cash proceeds for this tranche at VND21.5tn (USD860mn) and recorded a pre-tax gain of VND15.7tn (USD628mn) in Q1 2024. As of end-Q1 2024, VRE was not consolidated into VIC’s financial statements.
  • The transaction of selling 55% in SDI is in line with VIC's previous announcement (see more in our Flash Note dated March 18, 2024) that the sale is expected to be executed from March 2024 to Q3 2024 (VIC would complete divesting a 55% stake in SDI in March and the remaining 45% stake in the next six months). 
  • Property sales and retail leasing segments: Please find more details in our April 26 VHM Earnings Flash and VRE Earnings Flash. 
  • Hospitality segment: QoQ and YoY improving results with Q1 2024 revenue of VND2.5tn (USD100mn; +6% QoQ and +24% YoY) and EBIT loss of VND565bn (USD23mn) vs the Q1 2023 EBIT loss of VND1.3tn/USD53mn and Q4 2023 EBIT loss of VND1.2tn/USD48mn - fulfilling 21% and 28% of our respective 2024F forecasts.
  • Industrial segment: Q1 2024 revenue (VND6.1tn/USD243mn; +3.4x YoY) and EBIT loss (VND9.9tn/USD398mn) trailed our respective forecasts, which we attribute mainly to lower average prices of EV sales vs our projection. VinFast delivered 9,689 EV units in Q1 2024, of which ~56% were sold to VinFast’s related parties, mainly GSM; completing 19% of our full-year forecast. Please find more details in our April 19 VinFast Earnings Flash (US GAPP standards). 
  • VIC has been granted a credit line of a total of VND77.6tn (USD3.1bn) from commercial banks. 
  • Debt balance: As of end-Q1 2024, VIC’s total debt was VND226.5tn (USD9.1bn), with USD-denominated debts accounting for 34.5% of the total debt. Debts maturing within 12 months include (1) revolving bank loans of VND41.8tn (USD1.7bn), (2) long-term debts due in the subsequent quarters of 2024 amounting to VND65.6tn (USD2.6bn; in which ~85% has been secured or in discussion for refinancing, per management), and (3) other debts amounting to VND12.4tn (USD495mn). 
  • As of end-Q1 2024, if excluding VHM, VIC’s long-term loans and bonds set to mature within 12 months are VND65.1tn (USD2.6bn), in which corporate bonds are VND49.1tn (USD2.0bn; including a total of USD1.3bn from three exchangeable bonds/EBs having the right to redeem in 2024 alongside the right to exchange into listed shares) and syndicated loans are VND13.7tn (USD546mn).
  • Management gave updates on the refinancing plan for three international EBs with a put option for bond holders in 2024, as below:
  1. USD250mn EBs issued by VIC (maturity: 2026, exercise date: April 2024, exchangeable to VHM shares): VIC used cash on hand to redeem these bonds.
  2. USD425mn EBs issued by Vinpearl (maturity: 2026, exercise date: September 2024, exchangeable to VIC shares): VIC is in discussion for a refinancing plan.
  3. USD625mn private placement bonds issued by VIC (maturity in 2027; exercise date: from April 2024, exchangeable to VinFast shares): VIC will repurchase 50% of the USD625mn principal by cash and have reached an agreement with bondholders to extend the early redemption of the remainder by 18 months.

Figure 1: VIC’s Q1 2024 results

VND bn

Q1 2023

Q1 2024

YoY% Growth

2024F

Q1 as % 

of 2024F

Net revenue

38,963

21,739

-44%

195,340

11%

  • Property sales

28,823

4,761

-83%

110,146

4%

  • Leasing

2,165

2,087

-4%

9,716

21%

  • Hospitality

2,019

2,494

24%

11,615

21%

  • Industrials

1,762

6,067

244%

43,854

14%

  • Others

4,195

6,330

51%

20,009

32%


 

 

 

 

 

EBIT

-1,359

-8,712

N.M.

16,774

N.M.

  • Property sales

5,959

839

-86%

35,555

2%

  • Leasing

1,201

1,027

-14%

4,942

21%

  • Hospitality

-1,314

-565

N.M.

-1,992

28%

  • Industrials

-7,153

-9,938

N.M.

-27,168

37%

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

10,067

18,941

88%

13,731

138%

Financial expenses

-3,795

-7,277

92%

-22,621

32%

Other gain (loss)

-538

-443

N.M.

3,400

N.M.

PBT

4,264

2,494

-42%

11,284

22.1%

Tax expenses

-3,675

-1,159

-68%

-10,736

11%

PAT

589

1,335

127%

548

244%

Minority interest

-477

-6,599

1283%

-1,842

358%

NPAT-MI

1,066

7,934

644%

2,390

332%

 

 

 

 

 

 

EBIT margin

-3.5%

-40.1%

 

8.6%

 

  • Property sales

21%

18%

 

32%

 

  • Leasing

55%

49%

 

51%

 

  • Hospitality

-65%

-23%

 

-17%

 

  • Industrials

-406%

-164%

 

-62%

 

 

 

 

 

 

 

PBT margin

10.9%

11.5%

 

5.8%

 

PAT margin

1.5%

6.1%

 

0.3%

 

Effective tax rate

86.2%

46.5%

 

95.1%

 

NPAT-MI margin

2.7%

36.5%

 

1.2%

 

Source: VIC’s consolidated financial statements, Vietcap forecast (updated March 12, 2024)

Figure 2: VIC’s total debt breakdown by maturity (VND tn) as of end-Q1 2024

Source: VIC, Vietcap compilation

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