VRE – Strong 2023 performance; exceeded profit forecast with higher financial & other income – Earnings Flash & Analyst Meeting Note
  • 2024-01-30T00:00:00
  • Company Research
  • VRE announced its Q4 2023 results with net revenue of VND2.3tn (USD96mn; -30% QoQ and +10% YoY) and its NPAT-MI of VND1.07tn (USD44mn; -19% QoQ and +28% YoY). The QoQ declines were mainly due to lower property sales handovers in the quarter (54 shophouses were delivered in Q4 2023 vs 268 units in Q3 2023). 
  • In 2023, VRE’s net revenue (of which the retail leasing segment accounted for 80%) was VND9.8tn (USD403mn; +33% YoY) and its NPAT-MI was VND4.4tn (USD181mn; +59% YoY), fulfilling 100% and 106% of our respective forecasts. We attribute the higher NPAT-MI vs our forecast mainly to other income (mainly a penalty fee from a breach of contracts and a reversal from the insurance provision) and higher-than-expected financial income in Q4 2023. We also foresee an insignificant change to our 2024F NPAT-MI forecast of VND3.96tn (USD163mn; -10% YoY).
  • VRE’s retail leasing segment reported resilient 2023 results with growth of 14% YoY in revenue (VND7.8tn/USD321mn) and 23% YoY in gross profit (VND4.6tn/USD188mn) – which are in line with our respective forecasts. The average occupancy at VRE’s malls decreased slightly QoQ in Q4 2023 due to tenant turnover from financial constraints after the COVID-19 pandemic and weakened consumer spending sentiment, but it improved 1.3 ppts YoY to 84.8% in 2023.
  • VRE’s property sales segment recorded 2023 handovers of 346 shophouses with revenue of VND1.8tn (USD73mn; +4.7x YoY) and gross profit of VND805bn (USD33mn; +8.7x YoY). The segment’s 2023 revenue and gross profit tracked behind our respective forecasts by 11% and 9%. According to management, total end-2023 unbilled bookings amounted to VND290bn (USD12mn), in which VND120bn/VND170bn (USD5mn/USD7mn) is expected to be recognized in 2024/25G vs our forecasts of VND360bn (USD15mn) in 2024F and zero in 2025F. 
  • For 2024G, management targets to open six new malls with total new retail GFA of ~160,000sqm (unchanged vs its guidance stated at the October 2023 investor call), including Vincom Mega Mall Grand Park (GFA of ~45,200 sqm) in end-April 2024 with a secured occupancy rate of ~85%, Vincom Mega Mall Ocean Park 2 (GFA of ~76,700 sqm) in Q4 2024, and four Vincom Plaza malls. We currently forecast new retail leasing GFA of 106,000 sqm to be added in 2024F, which will raise VRE’s total retail leasing GFA to 1.85 million sqm by end-2024F vs 1.75 million sqm by end-2023. 
  • Management also guides that total capex needs for 2024-2026G new mall openings is ~VND9.0tn (USD370mn) vs our projection of a total of VND11.8tn (USD485mn) in the same period.

VRE’s 2023 results

VND bn

Q4
 2022

Q1
 2023

Q2
 2023

Q3
 2023

Q4
 2023

2022

2023

2023 

vs 2022

(% YoY)

2023F

2023 as 

% of 

2023F

Net revenue

2,137

1,943

2,173

3,333

2,343

7,361

9,791

33%

9,778

100%

  • Retail leasing

1,959

1,913

1,943

1,988

1,952

6,865

7,796

14%

7,783

100%

  • Property sales 

152

3

197

1,304

267

381

1,772

365%

1,995

89%

  • Others

26

27

32

40

124

116

223

92%

0

N.M.

Gross profit

1,105

1,188

1,189

1,700

1,268

3,817

5,346

40%

5,356

100%

  • Retail leasing

1,061

1,181

1,124

1,139

1,113

3,692

4,557

23%

4,474

102%

  • Property sales 

34

1

89

578

138

93

805

769%

883

91%


 

 

 

 

 

 

 

 

 

 

SG&A expenses

-167

-108

-118

-291

-263

-543

-780

44%

-752

104%

EBIT

938

1,081

1,072

1,409

1,005

3,273

4,566

39%

4,604

99%

Financial income

201

224

278

301

343

539

1,146

113%

962

119%

Financial expense

-92

-100

-80

-76

-74

-359

-330

-8%

-301

110%

Other income

27

45

-1

22

79

72

144

101%

0

N.M.

PBT

1,074

1,249

1,268

1,656

1,353

3,524

5,526

57%

5,265

105%

NPAT-MI

832

1,024

1,001

1,317

1,067

2,776

4,409

59%

4,159

106%

 

 

 

 

 

 

 

 

 

 

 

Gross margin

51.7%

61.2%

54.7%

51.0%

54.1%

51.8%

54.6%

 

54.8%

 

  • Retail leasing

54.2%

61.7%

57.8%

57.3%

57.0%

53.8%

58.4%

 

57.5%

 

  • Property sales 

22.6%

35.7%

45.0%

44.3%

51.5%

24.3%

45.4%

 

44.2%

 

 

 

 

 

 

 

 

 

 

 

 

EBIT margin

43.9%

55.6%

49.3%

42.3%

42.9%

44.5%

46.6%

 

47.1%

 

NPAT-MI margin

38.9%

52.7%

46.1%

39.5%

45.6%

37.7%

45.0%

 

42.5%

 

Source: VRE’s financial statements, Vietcap forecast (last updated November 16, 2023)

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