ACG – Q3 2024 EBIT drops QoQ due to GPM compression, surging SG&A expenses – Earnings Flash
  • 2024-10-31T00:00:00
  • Company Research

ACG announced its 9M 2024 results with net revenue of VND2,765bn (USD110.6mn; +6% YoY; 71% of our 2024F forecast) and NPAT-MI of VND330bn (USD13.2mn; +32% YoY; 62% of our 2024F forecast). In Q3 2024, net revenue was VND1,044bn (USD41.8mn; +2% QoQ, +8% YoY) and NPAT-MI was VND130bn (USD5.2mn; +10% QoQ, +24% YoY).

  • Q3 domestic sales saw a modest improvement while export sales dipped YoY: 9M net revenue rebounded 6% YoY, largely driven by exports (18% of total sales; +18% YoY) and slower domestic recovery (+4% YoY). In Q3, domestic sales continued to recover QoQ and YoY, further reinforcing our view that the domestic real estate market had bottomed out in Q1 2024. However, the domestic market’s speed of recovery was slower than our expectation. For direct exports, although we understand that the 13% QoQ drop could be attributed to the seasonality factor, we are concerned about the 5% YoY decline in Q3 sales, as we have expected exports demand to be stronger in 2024 vs 2023.
  • Q3 GPM declined QoQ, driven by both domestic and exports markets: Q3 GPM dropped to 31.4% from Q2 2024’s 32.5%, driven by lower margins of both the domestic market (down to 31.9% from 32.9%) and the exports market (down to 28.7% from 30.6%). However, 9M GPM still expanded YoY due to stronger demand compared to last year’s low base.
  • Q3 SG&A expenses surged QoQ and YoY. Q3 2024’s total SG&A expenses surged 40% QoQ and 28% YoY. Higher Q3 selling expenses were due to higher salary expenses (~40% of 9M 2024 selling expenses) which surged 2.7x QoQ and 47% YoY. Q3 2024 G&A expenses surged due to (1) ~80% QoQ and ~90% YoY higher salary expenses (45% of Q3 G&A expenses), and (2) recognition of bad debt provisions of VND24bn (USD1mn; +3.6x QoQ, +5.6x YoY; 34% of Q3 G&A expenses). Despite the higher YoY Q3 SG&A expenses, 9M 2024 results remained flat YoY as ACG completed expansion of its distribution network in early 2024.
  • “Other income/expenses” turned positive in Q3 from a loss in Q2 2024 as ACG recorded one-off expenses related to late VAT tax payments, totaling VND54bn (USD2.2mn) in Q2 (please refer to our Q2 2024 Earnings Flash for more details on these one-off expenses).

Overall, as 9M 2024 results trail our expectations, with revenue and NPAT-MI fulfilling 71% and 62% of our respective forecasts, we foresee downside risks to our current projections, pending a fuller review. 

ACG’s 9M 2024 results

VNDbn

Q3 2023

Q2 2024

Q3 2024

QoQ

YoY

9M 2023

9M 2024

YoY

2024F

9M as % of 2024F

Net revenue

963

1,026

1,044

2%

8%

2,611

2,765

6%

3,902

71%

- Domestic

786

833

877

5%

11%

2,185

2,263

4%

3,236

70%

- Direct exports

176

193

167

-13%

-5%

425

501

18%

667

75%

Gross profit

298

333

328

-2%

10%

769

875

14%

1,195

73%

- Domestic

255

274

280

2%

10%

677

733

8%

1,035

71%

Direct exports

44

59

48

-19%

10%

92

142

54%

160

89%

Selling expenses

-123

-110

-134

22%

8%

-388

-355

-8%

-529

67%

G&A expenses

-37

-36

-71

96%

92%

-121

-147

21%

-170

86%

EBIT

138

187

123

-34%

-11%

260

374

44%

496

75%

Financial income

32

44

40

-9%

23%

111

130

17%

193

67%

Financial expense

-9

-11

-7

-43%

-24%

-38

-28

-27%

-41

67%

Other income/expenses

-11

-52

1

N.M.

N.M.

-1

-49

3,904%

13

N.M.

PBT

151

168

157

-6%

4%

332

427

29%

661

65%

Tax expenses

-46

-50

-27

-46%

-41%

-82

-97

17%

-132

73%

NPAT-MI

105

118

130

10%

24%

249

330

32%

529

62%

GPM

31.0%

32.5%

31.4%

 

 

29.4%

31.6%

 

30.6%

 

- Domestic

32.4%

32.9%

31.9%

 

 

31.0%

32.4%

 

32.0%

 

- Direct exports

24.7%

30.6%

28.7%

 

 

21.7%

28.3%

 

24.0%

 

SG&A/revenue

16.7%

14.2%

19.6%

 

 

19.5%

18.1%

 

17.9%

 

EBIT margin

14.3%

18.3%

11.8%

 

 

10.0%

13.5%

 

12.7%

 

EBITDA margin

17.0%

20.7%

14.2%

 

 

13.0%

16.3%

 

15.6%

 

NPAT-MI margin

11.0%

11.5%

12.5%

 

 

9.5%

11.9%

 

13.6%

 

Source: ACG, Vietcap

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