Hoa Binh Construction and Real Estate Corporation​ – ​Outperform​ (HBC : HSX – ​Construction & Materials)

Hoa Binh Construction and Real Estate Corporation – Outperform (HBC : HSX – Construction & Materials)

• Hoa Binh Construction (HBC – Outperform) FY2018 results fell short of their targets. NPAT dropped 27.2% y/y to VND 627 billion, despite net sales increasing by 13.5% y/y to VND 18,201 billion.

• HBC’s FY2018 results showed a considerable drop of 27.2% in NPAT due to a shrinking GPM that resulted from harsher condition in the real estate market amid increasing competition.

• With the current financial structure relying heavily on debt, the interest burden is a concern, as are outstanding receivables.

• The situation, however, might be eased if the Company successfully raises equity this year to improve their capital structure.

• The Company is proceeding with sales of stake in some real estate projects.

• With a large backlog at the end of 2018, HSC expects a recovery in FY2019 and forecasts net sales at VND 20,335 billion (+11.7% y/y) and NPATMI at VND 697 billion (+9.4% y/y).

• We revise down our fair value from VND 28,200 to VND 24,300 due to expectations of a slower growth rate in the mid-term amidst a more difficult outlook for the real estate market.

• Reiterate Outperform.

HSC