Summary of the 2020 H1 results of Dat Xanh Group JSC (DXG VN)
H1/2020 results highlights:
- DXG’s sales dropped by 53.9% y/y to VND1,080bn as the company did not book any projects in the reporting period. Meanwhile, brokerage sales declined by 43.4% y/y as the Covid-19 outbreak weakened transaction activities of the whole real estate market. Operating profit dropped 54.9% y/y to VND327bn. However, DXG recorded a net loss of VND488bn in H1/2020 due to the loss from the divestment at Long Dien Group (LDG).
- By the end of H1/2020, Cash and cash equivalents made up 7.3% of total assets. Financial leverage was moderate with a D/E ratio of 0.67x and a D/A ratio of 0.28x.
- Since 2019, the construction license issue in HCMC has caused, almost all DXG’s projects here to postpone, which affects the company’s current earnings stream. Since then, DXG has promptly expanded its land bank to nearby provinces to solve this issue. Although sales in this area have made good progress so far, they will only be booked from 2021 onwards. Therefore, they cannot compensate for the company’s low earnings in 2020.
- We expect the company will bear a loss of VND195bn in 2020 thanks to multiple factors, including the low booking year in 2020 for its developing projects, weak brokerage business due to Covid-19, and the loss from divestment at LDG . However, in 2021, products sold in 2019 and 2020 will be handed over, thus related revenue and net profit will be recorded. The brokerage business is expected to recover and there will be no one-off loss, DXG’s net profit will surge to VND1,937bn in 2021.
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