Some projects have postponed their business launch dates.
Based on the progress of NLG's projects and business plan, BVSC Securities has adjusted its revenue and profit forecast for Nam Long Investment Corporation (NLG) in 2023. Specifically, the adjusted revenue is 4,635 billion VND. Net profit attributable to parent company shareholders is 768 billion VND, down from the 970 billion VND forecast at the beginning of 2023.
Specifically, BVSC adjusted (1) the handover plan for the low-rise section of Mizuki from 2023 to 2024; (2) the number of additional products expected to be sold in Q4/2022 by Izumi was not implemented as planned and therefore could not be recorded in 2023; and (3) adjusted upwards the selling and administrative expenses due to the high level of business recognition figures.
In its report at the beginning of 2023, BVSC adjusted the timelines for Nam Long's large-scale projects located outside the city center, such as Southgate, Izumi, and Paragon. However, at the Annual General Meeting, Nam Long's leadership shared their policy of focusing on products that meet real needs (Flora, Ehomes, etc.) and commercial spaces in 2023.
Large-scale projects will have their business plans extended. Therefore, some projects previously expected to be operational in Q4 2023, such as Paragon and Izumi (part of GD1), are likely to be postponed to 2024.
According to BVSC, the main risk for Nam Long currently comes from customer purchasing power. This securities company believes that customer purchasing power is affected by several factors: (1) recession in industries related to production, consumption, and import/export; (2) capital flow bottlenecks in the bond market; and (3) real estate lending interest rates remain high at 12-13%. These factors will not improve immediately in the short term but are forecast to improve at the beginning of 2024.
Negative cash flow
According to the Q1 financial report, Nam Long recorded revenue of VND 235 billion, a 60% decrease compared to the same period last year. Gross profit reached VND 159 billion, also down 36% compared to the same period last year. This was due to the low cost of goods sold for the real estate segment at 4%.
After deducting expenses, the net profit attributable to shareholders of the parent company Nam Long reached VND 6.8 billion, several times higher than the same period last year. Despite the profit, the net cash flow from business operations was negative over VND 752 billion, compared to a negative over VND 93 billion in the same period last year.
As of March 31, 2023, Nam Long's total assets reached VND 27,264 billion, an increase of VND 180 billion compared to the beginning of the year. Inventory increased by VND 781 billion, reaching VND 15,611 billion, accounting for 57%. Short-term receivables decreased by 8% to VND 3,276 billion, while cash and cash equivalents decreased by VND 350 billion compared to the beginning of the year, reaching VND 3,426 billion.
Regarding funding sources, Nam Long's liabilities at the end of the first quarter reached VND 14,209 billion, an increase of VND 440 billion compared to the beginning of the year. Notably, borrowings increased by 8% to VND 5,604 billion, and short-term advances from customers increased by VND 345 billion to VND 3,616 billion.
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