Company Quarterly Earnings Update – VGC VN – 2019 Q1

Summary of the Q1/2019 results of Viglacera Corporation (VGC VN) 

Q1/2019 result and H1/2019 estimated highlights:
  • VGC’s net revenue rose by 24.0% yoy to VND 2,269bn in Q1/2019. The real estate segment’s revenue jumped by 76.2% yoy to VND 685bn, accounting for 30% of total net revenue. Robust bookings from the industrial park (IP) development business were the main reason for the good result of the real estate segment. Meanwhile, the building materials segment also reported nice revenue growth of 9.9% yoy to VND 1,584bn, making up 70% of total sales.
  • The company’s gross margin improved to 21.5% from 20.5% in the same period of last year, mainly thanks to higher sales contribution from the IP development business, which has the highest gross margin among all of VGC’s business lines. Net profit was up by 53.5% yoy to VND 159bn.
  • As for H1/2019, VGC’s management estimates net revenue to reach VND 4,622bn, up by 12% yoy. The estimated profit before tax should be VND 500bn, higher by 11%. So far in 2019, all business lines of the company have performed in line with our projections so far.
  • By the end Q1/2019, VGC had a total of VND 1,748bn in cash and cash equivalent, which accounted for 10.2% of total assets. Financial leverage was very low with a D/A ratio of 0.13x and a D/E ratio of 0.31x.
  • VGC’s building materials segment should be supported by the solid development of the Vietnamese construction sector, which is likely to continue to benefit from strong housing demand in Vietnam. As for the real estate segment, VGC is likely to continue to take advantage from expected strong FDI inflows into Vietnam in coming years.
  • The IP development business and sanitary wares (its capacity is up by 67% since the start of 2019) should be VGC’s two key growth drivers in coming years. We expect that net profit will advance by 29.3% yoy in 2019 and increase by another healthy 17.1% in 2020.

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