- 2025-01-23T00:00:00
- Company Research
- VRE announced its 2024 results with net revenue of VND8.9tn (USD351mn; -9% YoY) (with 88% from retail leasing and 9% from property sales) and NPAT-MI of VND4.1tn (USD161mn; -7% YoY). The YoY decline in 2024 NPAT-MI is due to a YoY decrease in retail leasing gross margin and property sales recognition, partly offset by higher financial and other incomes.
- 2024 revenue and NPAT-MI completed 99% and 98% of our full-year respective forecasts. We foresee insignificant changes to our 2025F NPAT-MI forecast of VND4.3tn (USD168mn; +4% YoY), pending a fuller review.
- Retail leasing segment: The segment continued a QoQ improvement in Q4 2024. The segment’s revenue was VND2.0tn (USD80mn; +2% QoQ and +4% YoY), and the leasing NOI margin was 67.9% (+0.2ppts QoQ and -4.2ppts YoY) in Q4 2024. The average occupancy rate improved 0.6ppts QoQ to 85.4% in Q4 2024, ending full-year 2024 at 84.2% (vs H1 2024 of 83.4% and full-year 2023 of 84.8%).
- In 2024, the retail leasing segment’s revenue was VND7.9tn (USD309mn; +1% YoY). The leasing NOI margin in 2024 was 68.8%, down 5.4 ppts YoY mainly due to provision expenses of VND242bn/USD9.5mn mainly related to some tenants in the entertainment category and an increase in energy costs. If excluding the one-off increase in provision expenses, the 2024 leasing NOI margin would be 73% (-1ppt YoY).
- For 2025G, management guides for the leasing NOI margin to increase YoY to ~70% (vs our forecast of 70.8%), driven by 1) the full-year contribution from improved occupancy in H2 2024, 2) an increase in the average occupancy rate to 88-90% in 2025G, 3) single-digit growth in the average rent rate, and 4) an expected stable cost base compared to 2024.
- VRE launched one VMM and four VCP malls, adding ~95,000 sqm of retail GFA in 2024, including VMM Grand Park (in HCMC; retail GFA of 45,300 sqm) in June, two VCP malls (in Dien Bien Phu and Ha Giang; total retail GFA of 21,700 sqm) in June, VCP Bac Giang (retail GFA of 13,400 sqm) in July, and VCP Dong Ha Quang Tri (retail GFA of 14,300 sqm) in November.
- At end-2024, VRE had a total of 88 shopping malls under operation with a total retail leasing GFA of 1.84 million sqm (vs 83 malls and 1.75 million sqm at end-2023). We project VRE’s total retail GFA at end-2025F to be 1.96 million sqm.
- New mall opening plan: For 2025G, management targets to open three new malls with a total of ~120,000 sqm retail GFA (unchanged vs the previous guidance in the October 2024 earnings call), including:
- Two VMM malls – Ocean City (Hung Yen, retail GFA of 53,200 sqm) in Q2 2025G and Royal Island (Hai Phong, retail GFA of 47,600 sqm) in Q3 2025G.
- One VCP mall – Vinh (Nghe An, retail GFA of 19,200 sqm) in Q4 2025G.
- Property sales segment: In 2024, the segment reported revenue of VND839bn (USD33mn; -53% YoY) and gross profit of VND339bn (USD13mn; -58% YoY) with a total of 167 shophouses delivered in 2024 (vs 346 units in 2023). At end-2024, VRE’s total unbilled bookings amounted to VND187bn (USD7mn), which is expected to be fully recognized in 2025G, per management.
- In 2025G, the company plans to launch presales for the commercial components (shophouses) in VHM's Royal Island and Golden Avenue projects, which they acquired from VIC and VHM in H2 2024. The components encompass ~109,800sqm of NSA, including ~1,000 units in Royal Island and ~200 units in Golden Avenue. Handover recognition is expected to begin in 2026G, unchanged vs previous guidance. We have factored this property sales pipeline into our earnings forecasts for VRE.
- Deposit disbursement for project pipeline: In Q4 2024, VRE disbursed total deposits to related parties of VND4.6tn (USD180mn) for the acquisition of the two commercial components mentioned above and for its new mall pipeline (including VMM Royal Island and VMM Co Loa). At end-2024, VRE’s cash and cash equivalents (including short-term deposits) totaled VND3.0tn (USD118mn), down VND1.9tn/USD73mn QoQ. At end-2024, VRE’s net D/E was 2.8% vs -2.1% at end-Q3 2024 and -3.3% at end-2023.
VRE’s 2024 results
VND bn | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | Q4 2024 | 2023 | 2024 | YoY | 2024F | 2024 as % as 2024F |
Net revenue | 2,343 | 2,255 | 2,479 | 2,078 | 2,128 | 9,791 | 8,939 | -9% | 9,010 | 99% |
| 1,952 | 1,928 | 1,940 | 1,983 | 2,027 | 7,796 | 7,878 | 1% | 8,194 | 96% |
| 267 | 277 | 467 | 36 | 60 | 1,772 | 839 | -53% | 815 | 103% |
| 124 | 50 | 72 | 59 | 41 | 223 | 222 | -1% | 0 | N.M. |
Gross profit | 1,268 | 1,255 | 1,209 | 1,089 | 1,201 | 5,346 | 4,755 | -11% | 4,886 | 97% |
| 1,113 | 1,155 | 1,045 | 1,066 | 1,131 | 4,557 | 4,397 | -4% | 4,595 | 96% |
| 138 | 98 | 156 | 16 | 70 | 805 | 339 | -58% | 290 | 117% |
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SG&A expenses | -263 | -207 | -216 | -248 | -312 | -780 | -983 | 26% | -751 | 131% |
EBIT | 1,005 | 1,048 | 994 | 842 | 889 | 4,566 | 3,773 | -17% | 4,135 | 91% |
Financial income | 343 | 435 | 420 | 383 | 547 | 1,146 | 1,786 | 56% | 1,626 | 110% |
Financial expense | -74 | -140 | -179 | -244 | -275 | -330 | -838 | 154% | -687 | 122% |
Other income | 79 | 25 | 42 | 138 | 209 | 144 | 413 | 186% | 0 | N.M. |
PBT | 1,353 | 1,367 | 1,277 | 1,119 | 1,370 | 5,526 | 5,133 | -7% | 5,274 | 97% |
NPAT-MI | 1,067 | 1,083 | 1,021 | 906 | 1,085 | 4,409 | 4,096 | -7% | 4,166 | 98% |
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Gross margin | 54.1% | 55.7% | 48.8% | 52.4% | 56.5% | 54.6% | 53.2% |
| 54.2% |
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| 57.0% | 59.9% | 53.9% | 53.7% | 55.8% | 58.4% | 55.8% |
| 56.1% |
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| 51.5% | 35.3% | 33.5% | 44.2% | 49.4%* | 45.4% | 40.5% |
| 35.6% |
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EBIT margin | 42.9% | 46.5% | 40.1% | 40.5% | 41.8% | 46.6% | 42.2% |
| 45.9% |
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NPAT-MI margin | 45.6% | 48.0% | 41.2% | 43.6% | 51.0% | 45.0% | 45.8% |
| 46.2% |
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Source: VRE’s financial statements, Vietcap forecasts (last updated November 26, 2024). Note: (*) Excluding the reversal of a VND40bn expense for the Dong Ha Quang Tri project to adjust its costing upon finalization of the Q4 2024 financial statements.
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