• We attended VRE’s annual general meeting (AGM) on April 23. 
• Shareholders approved management’s 2024G guidance for revenue of VND9.5tn (USD380mn; -3% YoY) and NPAT of VND4.42tn (USD177mn; flat YoY), which are 8% and 6% higher than our respective forecasts. VRE’s NPAT results in 2022/23 were equivalent to 116%/94% of their respective base-case guidance set at the beginning of each year. 
• Distribution plan for 2023 retained earnings: Shareholders approved that the 2023 cumulative undistributed earnings will be retained for use in the company’s business operations and expansion.
• Amendment of business line: Shareholders approved the removal of business lines including education (preschool, primary, lower-secondary, and upper secondary education) and training (basic, intermediate, and college-level training) as the company is practically inactive in these areas.
• Change in BOD members for the term 2023-2028: Shareholders approved the (1) step-down of two members, Ms. Thai Thi Thanh Hai (chairwoman of VRE from 2018) and Ms. Le Mai Lan, and the (2) election of Mr. Nguyen Hoai Nam (current CEO of Berjaya Group in Vietnam).

Management guides for 2024G NPAT of VND4.42tn (USD177mn; flat YoY), in which management expects the retail leasing segment to continue growing in 2024G supported by the improvement in tenant sales and occupancy, while expecting a lower YoY contribution of the property sales segment. This guidance is higher than our 2024F NPAT forecast, which we attribute mainly to management’s guidance for higher property sales recognition than our expectation.

Preliminary Q1 2024 revenue and NPAT fulfilled both 26% of our respective 2024F forecasts. Management stated at the AGM that in Q1 2024, VRE’s preliminary net revenue (of which the retail leasing segment accounted for ~85% and property sales accounted for 10-12%) increased 16% YoY to VND2.25tn (USD90mn) and its preliminary NPAT increased 6% YoY to VND1.08tn (USD43mn), partly supported by the handovers at some shophouses at the Dong Ha (Quang Tri) project. Accordingly, preliminary Q1 2024 retail leasing revenue was ~VND1.9tn (USD77mn; -2% QoQ and flat YoY) – completing 22% of our 2024F forecast.

Management targets to open six new malls in 2024G (unchanged vs its guidance stated in the October 2023 investor call). Of these, four malls (including Vincom Mega Mall Grand Park with GFA of ~45,200 sqm and secured occupancy of nearly 90% as of end-Q1 2024; and three Vincom Plaza malls) are expected to open in June 2024G and two malls are expected to open in Q4 2024G. We currently forecast VRE’s total retail leasing GFA to increase to 1.85/1.97 million sqm by the end of 2024/25F vs 1.75 million sqm by end-2023. 

The medium-term plan for VRE’s mall opening pipeline remains intact post VIC’s divestment plan. Management stated that for projects that VRE has made deposits with VIC/VHM under business cooperation contracts, terms relating to the investment cost and economic interests remain intact. (For more detailed information on the divestment plan, please refer to our Flash Note dated March 18, 2024).

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