CÔNG TY CỔ PHẦN ĐẦU TƯ NAM LONG (HOSE: NLG)
Số 6 Nguyễn Khắc Viện, P. Tân Phú, Quận 7, TP.HCM
Điện thoại: (84.28) 54 16 17 18
Fax: (84.28) 54 17 18 19
Rong Viet Securities Corporation (VDSC) has updated its report on Nam Long Group’s (NLG) regarding the exploitation of a large clean land fund and the implementation of Waterpoint project in Long An.
Waterpoint – The biggest project to ensure sustainable growth
According to the VDSC report, the Waterpoint project is strategically located in Ben Luc district, Long An province, close to Trung Luong and Ben Luc - Long Thanh highways. It takes about an hour to get from Ho Chi Minh City center to the project, with a distance of approximately 30 km. In addition, one of the greatest advantage of this project is the natural ecosystem, including the three sides of the Vam Co Dong river and 5-km lakeside. Waterpoint is located in a 355 hectare area.
Waterpoint Long An’s location
According to NLG, the company plans to develop 165ha in Phase 1 over the next 6 years and provides more than 3,000 lower floor products to the market. Selling price will range from 16 to 20 million per m2, equivalent to 1.3-1.9 billion per 100-m2 unit.
VDSC believes that this price level is acceptable and suitable for young Vietnamese families. In terms of financial performance, Waterpoint is expected to generate a profit of around VND 2,100 billion in the first period after five years of development. VDSC estimates that NLG will record a profit before tax of VND300 to 350 billion after revaluating this project in 2018.
Nam Long is planning to hold groundbreaking ceremony for phase 1 of Waterpoint project on June 25. The total investment capital is about VND6.900 billion with expected revenue of VND10.700 billion.
At the same time, VDSC believes that Nam Long is taking final step to start multiple projects after a long period of accumulation. In 2018, after the success of Mizuki Park project, Nam Long will be busy implementing new projects, including 8.5ha Akari City and Flora Novia, generating momentum for future growth.
The Akari City project is ready for sale in the Q3 of this year. The project is located on Vo Van Kiet Boulevard, Binh Tan District, Ho Chi Minh City with an area of 8.5 hectares, offering 4,600 Flora apartments. Similar to previous projects, Nam Long will continue its 50:50 strategic partnership with two Japanese partners, Hankyu Hanshin Properties and Nishi Nippon Railroad. VDSC believes that this will be an appropriate strategic move, as the joint venture will not only contribute more capital to develop the project but also help the Nam Long to manage, design and implement the project.
The Akari City project targets middle segment with an estimated selling price of VND22 million per m2. The first sale of about 1,000 units will happen in the next quarter, estimated to return a profit before tax of VND80 billion in 2018 after a revaluation of the project.
Nam Long will also start selling the Flora Novia project on Pham Van Dong Street, Thu Duc District. The first sale will happen in the second half of 2018, supplying 500 luxury apartments for the market. As of May, the show house is nearing completion. VDSC estimates the average selling price is VND20-22 million per m2.
After more than a year of development, the Mizuki Park and Nguyen Son projects are gradually forming. With a favorable location and reasonable price, the sales of these projects are achieving good results.
Mizuki Park sale progress (updated in May 2018)
Strong finance is an advantage
VDSC identifies Nam Long’s strong financial status. The leverage ratio is relatively low compared to most other real estate companies. Total debt to total assets has been stable at an average of 0.5 times in recent years.
The real estate market will no longer benefit from favorable lending rates as tightening monetary policy is taking shape. And Nam Long will be one of the companies that are less likely to be affected by the trend, supported by low leverage and cash flow from Japanese partners.
By the end of July, Nam Long will auction more than 40 million shares to most domestic investors with a starting cost per share of VND26.500. VDSC believes that a successful auction can place a positive impact on NLG's share price in the short term.
VDSC used the RNAV method to evaluate Nam Long’s projects, assess NLG stock price at VND40.200 per share, 39.3% higher than the closing price on June 20 and evaluate Nam Long’s performance after launching two core projects are Waterpoint and Akari City.