2016 AGM UPDATE 02/03/2016

Transcription

1 2016 AGM UPDATE 02/03/2016 DAT XANH GROUP JSC (DXG) Share price movement compared to VNIndex 20% 15% DXG 10% 5% 0% 26/1/15 26/4/15 26/7/15 26/10/15 26/1/16-5% -10% -15% -20% -25% -30% Background information COMPANY INFORMATION Sector Real estate Established 2003 Chartered Capital (billion VND) 1,173 Stock code / Exchange DXG/HOSE TRADING INFORMATION Beta /03/2016 (VND) 16, week highest/lowest price (VND) 19,800/12,100 Market cap (billion VND) 1,957 No. of outstanding shares (share) 117,263,570 Avg. 52-week trading volume (share) 1,302,261 Analyst Do Quang Hung hungdq@tvs.vn Source: TVS Research HIGHLIGHTS OF 2016 DXG ANNUAL GENERAL MEETING Update on 2015 business results 2015 revenue reached VND1,394.5 billion, growing 175.5% YoY and exceeding 3% of the plan, thanks to: i) The real estate brokerage segment grew 145% yoy thanks to the revitalized landscape of the real estate market, reaching VND753 billion, of which VND87 billion came from secondary business activities (54% growth YoY). ii) Construction segment also grew strongly at 244%, reaching VND153 billion, the total value of new contracts signed in 2015 was VND2,601 billion (+396%) iii) Transfer of property segment reached VND488 billion, growing 216%, thanks to revenue booking from Sunview Town and Gold Hill projects.

2 TVS Research Revenue growth over the years (billion VND) Revenue structure of DXG Construction Development Sales Construction Development Sales Financial ratios (billion VND) P 2015A %plan %yoy Revenue 506 1,350 1, % 175% Profit after tax (PAT) % 101% PAT margin 33% 18% 24% EPS (VND) 2,346 3,125 33% 2015 profit after tax exceeded 38% compared to the plan, reached VND336 billion (101% YoY growth). However, we noticed a reduced profit after tax margin of 24% from 33% (2014), due to lower gross margin, caused by the increase of the construction segment and real estate development segment, gross margin of these 2 segments plummeted from 28% to 5% and 40% to 22% respectively. In addition, financial income also decreased due to no booking of profit from projects sales in 2014 and finacial costs increased due to inflated borrowing during the year Business Plan A. Revenue and profit plan DXG set 2016 plan at VND2,200 billion in revenue, equaling 57.7% growth compared to In our opinion, the revenue plan is feasible with the revenue booking of Gold Hill, Lux City and Sunview Town projects, estimated to bring VND1,400 - VND1.500 billion in revenue, contributing to real estate development s growth. Besides, in light of positive real estate market in 2016 and DXG s status in real estate brokerage, revenue from brokerage service will continue to grow in Profit after tax plan of VND 506 billion (50% growth YoY), equaling profit margin of 23%, down slightly from 2015 result. In view of the interest rate maintained stable and material costs remained low, we consider this profit after tax plan to be in line with DXG capability.

3 2016 AGM UPDATE 02/03/2016 Plan (Billion VND) P %yoy Revenue 1,395 2,200 57% PAT % EPS (VND) 3,125 2,741-12% B. Dividends in shares and ESOP shares issuance DXG sẽ thực hiện trả cổ tức bằng cổ phiếu với tỷ lệ thực hiện quyền là 20:3 (15% vốn điều lệ hiện tại) tương ứng với 17.6 triệu cổ phiếu. Bên cạnh đó, DXG cũng sẽ phát hành 1 triệu cổ phiếu thưởng (0.85% số CP đang lưu hành) cho CBCNV theo chương trình ESOP trong năm Cả hai hoạt động này được tài trợ bởi nguồn LNST chưa phân phối DXG will pay dividends in shares at 20: 3 ratio (15% of current charter capital), equaling 17.6 million shares. Besides, DXG will issue 1 million bonus shares (0.85% of outstanding shares) to employees under ESOP in Both issuances are funded by 2015 undistributed profit after tax. C. Shares issuance plan to existing shareholders to increase charter capital - Number of shares issued: the maximum number of shares issued is 117,205,570 shares, equaling the ratio of 1: 1. - Issued price: VND10,000/share, equaling the expected amount of VND1,172 billion. - Method: offered to existing shareholders under purchase rights, which is not transferable, the shares not exercised will be offered to other parties, decided by the Board. - Time: 3-4 months after the meeting of shareholders, carried out simultaneously with the issuance of shares to pay dividends. - Total number of shares after the issuance: 253,049,975 shares - Intended use of fund: The entire capital raised will be used to finance Venice City project of KDC project and Nam Rach Chiec resettlement at An Phu, District 2. Estimated total investment for the project is VND5,241 billion, in which: Capital structure (billion VND) Bank loan Issued Capital Customers Advances Total Venice City Project 1,325 1,172 2,741 7,272 Proportion 25% 22% 52% 100% In general, for each real estate project, the higher the rate of capital raising from customers, the higher possibility of of success for the project, as this is non-interest capital, however this depends on the landscape of the real estate market, the attractiveness of the project and the reputation of the investor. Besides, for an average project, the usual ratio of client capital raising is at approximately 60%. The Venice City project is in An Phu, District 2, an area with fairly active real estate transactions recently. Moreover, Venice City is a clean project, which has completed compensation, tax payment in full, detailed drawings and is pending for building permit approval, it is expected to begin construction in the next 3 months. With DXG s strong reputation on the market, we believe the project capital structure is conservative and highly feasible.

4 TVS Research In summary, although additional capital raising might cause stock dilution and EPS reducing, however the percentage of ownership of investors remain the same (in case investors executing all purchase rights). Besides, DXG had plan to use the raised capital for Venice City project, which we believe is very promising. Therefore it s likely this issuance will be successful and will contribute to increasing resources for DXG, especially in light of limited capital from banks. D. Projects investment plan in 2016 In 2015, DXG has completed several merger and acquisition (M&A) deals to expand land reserves and current project resources. The total land reserves in 2015 has increased by about 50% from 30.2 ha to 44.5 ha. In 2016, in addition to continuing to expand the clean land reserves to increase the long-term potential, DXG will focus on developing projects in available strategic locations, e.g LuxCity (District and 7,000 m2 office), Opal Tower (Thu Duc ), Venice City (District 2 - more than 3,000 )... The progress of the projects in form of direct investment Project Location Type Scale Sunview Town Luxcity Opal Riverside Opal Tower Zen Plaza Opal Garden The Palm City Venice City Auris City Cara Riverview Greeny Riverview Lux Garden Polaris Thu Duc Apartment 36,697 m2, 1,603, 36 shop houses District 7 Apartment 7,481 m2, 432 and 7,000 m2 office Thu Duc Apartment 14,042 m2 and 626 Thu Duc Apartment 4,668 m2, 260 Thu Duc Apartment 13,289 m2 and 517 Thu Duc Apartment 8,250 m2 and 470 District 9 Apartment 73,400 m2, 237 townhouses, villas District 2 Apartment 67,143 m2 and 3,000 Investment duration District 8 Apartment 8,823 m2 and 540 District 8 Apartment 3,415 m2 and 196 District 7 Apartment 8,526 m2 and 769 District 7 Apartment 9,121 m2 and 400 Thu Duc Apartment 2,401 m2, 180 and 6,063 m2 officetel Total investment (billion VND) 1, , Total 12,803

5 2016 AGM UPDATE 02/03/2016 Other information The impact of the revised draft of Circular 36 on DXG: According to DXG, circular 36 on the one hand will limit the growth of the entire real estate market due to tightened bank capital flows into real estate, on the other hand it will highlight the real estate developers with solid financial resources, good construction capacity, high sales efficiency and attractive projects, serving the real demands of the majority of the population. At the 2016 Annual General Meeting, Mr. Luong Tri Thin, DXG Chairman, said he has worked with major banks such as Vietinbank, VP Bank,... to prepare for changes in credit policies to DXG, and received commitment of capital support from these banks.

6 TVS Research ANALYST CERTIFICATION We, Research Department of Thien Viet Securities Company (TVS), hereby certify that the views expressed in this research report accurately reflect our personal views about the subject securities or issuers. We will not compensate, directly or indirectly, for any specific recommendations or views expressed in this report. by Thien Viet Securities Company. All rights reserved. This publication may not be redistributed, retransmitted or disclosed as a whole or partially in any form or manner without the prior written consent of Thien Viet Securities Company (TVS). The information herein is obtained from various sources and TVS does not guarantee its accuracy. Neither the information nor any opinions expressed in this publication constitutes a buy or sell recommendation on any securities or investment. TVS therefore does not take any responsibilities for any investor s decisions. THIEN VIET SECURITIES COMPANY HO CHI MINH 63A Vo Van Tan St, District 3 Floor 9, Bitexco Nam Long Building Tel: +84 (8) Fax: +84 (8) HA NOI 22 Lang Ha, Dong Da TDL Building Tel: +84 (4) Fax: +84 (4) RESEARCH DEPARTMENT INVESTMENT BANKING BROKERAGE DEPARTMENT research@tvs.vn ib.hcm@tvs.vn brokerage.hcm@tvs.vn