Nam Long Group experiences sluggish business but sees a sudden surge in profits.

Công Luận•30/10/2023

At the end of the third quarter, Nam Long achieved net revenue of nearly 357 billion VND, a 60% decrease compared to the same period last year. After deducting the cost of goods sold, the gross profit was nearly 150 billion VND, less than half of that in the third quarter of 2022.

Business is sluggish with declining revenue and fluctuating profits for the year. (Figure 1)

According to the explanation sent to investors, Nam Long stated that the majority of revenue during the period came from the sale of houses and apartments (accounting for 86% of total revenue for the quarter). Of these, Mizuki was a key project handed over during the period, but because it belongs to a joint venture company, its revenue was not consolidated; only the allocated profit was recorded.

Financial revenue increased only slightly compared to the same period last year, while financial expenses increased by 38%, mainly due to interest expenses of over 66 billion VND, an increase of more than 70%.

The recorded expenses were lower, mirroring the decline in business. However, this did not offset the poor performance. The net profit from the real estate company's operations was only slightly over 7 billion VND, one-tenth of the previous year.

The entire profit attributable to the parent company's shareholders in the consolidated financial statements is based on the deferred corporate income tax expense for the period, amounting to nearly VND 81 billion.

Similar to the results of the first nine months of the year, core business operations declined, amidst an increase in interest expenses of nearly VND 100 billion. As a result, Nam Long's net profit from core business operations decreased slightly compared to the same period last year. Net profit attributable to parent company shareholders was nearly VND 194 billion, an increase of 63%, mainly due to deferred corporate income tax expenses.

In contrast to the growth reported in the consolidated financial statements, the parent company Nam Long's profit figures in the separate financial statements showed a sharp decline.

In the third quarter, parent company Nam Long recorded net revenue of just over 71 billion VND, mainly from project management revenue. This figure represents a sharp decrease compared to the net revenue of over 600 billion VND in the third quarter of the previous year.

Gross profit was a mere 15 billion VND, compared to over 200 billion VND in the same period last year. As a result, the parent company Nam Long incurred a net loss of over 46 billion VND, an increase from the loss of over 42 billion VND in Q3/2022.

For the first nine months of the year, Nam Long's separate financial report recorded a net profit of only nearly 8 billion VND, compared to nearly 143 billion VND in the same period last year.

By the end of the third quarter, Nam Long's consolidated total assets reached nearly VND 27,700 billion, an increase of over VND 600 billion compared to the beginning of the year. The increase in value was primarily due to inventory.

Nam Long's total inventory value at the end of the third quarter reached over VND 16,800 billion, an increase of VND 2,000 billion compared to the beginning of the year, largely consisting of unfinished real estate projects. Leading the list is the unfinished construction value at the Izumi project, recording over VND 9,000 billion, an increase of over VND 700 billion compared to the beginning of the year. Inventory at the Waterpoint project (phase 1) is VND 3,556 billion, phase 2 is VND 1,527 billion; the Hoang Nam (Akari) project has over VND 1,047 billion…

Business is sluggish with declining revenue and fluctuating profits for the year. (Figure 2)

Total liabilities at the end of the third quarter amounted to nearly VND 14,560 billion, an increase of VND 790 billion compared to the beginning of the year, of which short-term lease financing debt was VND 2,325 billion and long-term lease financing debt was VND 3,336 billion. The total short-term and long-term lease financing debt exceeded VND 5,660 billion.

Nam Long's loans are largely secured by land use rights, interest guarantee rights, and some are unsecured loans. Bond loans, on the other hand, are primarily secured by shares.

Nam Long's largest creditor from the banking perspective is Orient Commercial Bank (OCB ), with a total outstanding debt of over 1,100 billion VND. It is also known that OCB holds 500 billion VND in bonds issued by Nam Long.

Among the notable bondholders, International Finance Corporation has outstanding debt of VND 1 trillion, secured by over 182.5 million shares of Nam Long VCD. Several insurance companies also hold Nam Long bonds, including Manulife Vietnam (VND 510 billion); AIA Vietnam Insurance (VND 120 billion); and Generali Vietnam Life Insurance (VND 30 billion). These bonds are guaranteed by over 56.1 million shares of Nam Long VCD.

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