Property developer Novaland posts highest net profit in 9 quarters

Real estate developer Novaland reported a net profit of VND941 billion ($34.4 million) in Q2/2024, marking a giant leap from a loss of VND634 billion ($25.2 million) in the same period last year.

It was also the highest profit the company earned in nine quarters.

According to its Q2 financial statement, Novaland earned net revenues of VND1.55 trillion ($61.6 million), up 47% year-on-year.

The company had to pay over VND2.36 trillion ($93.8 million) in financial costs in the second quarter, a surge from VND882 billion in the same period last year.

It recorded a loss of VND797 billion ($31.7 million) from the transfer of Huynh Gia Huy JSC as also losses from exchange rate differences. Sale costs also doubled year-on-year while corporate governance expenses decreased.

In the first six months of the year, Novaland, listed on the Ho Chi Minh Stock Exchange as NVL, recorded revenues of VND2.25 trillion ($89.45 million) and after-tax profits of VND374 billion ($14.87 million), a significant improvement over last year's loss of more than VND1 trillion.

As of June 30, 2024, the company's total liabilities stood at VND194.53 trillion ($7.73 billion), down a slight 0.8% compared to the beginning of the year. Of this, short/long-term financial debt was nearly VND59.22 trillion, much higher than cash and cash equivalents or short-term financial investments that the company was holding (VND2.17 trillion or $86.29 million at the end of Q2).

Short and long-term borrowings

Novaland's short-term debt decreased by VND438 billion ($17.4 million), or 1.4%, from the beginning of the year but long-term debt rose 7.25% to over VND1.94 trillion ($77.1 million).

The short/long-term loans were owed to Credit Suisse AG’s Singapore branch, which accounted for the largest proportion - more than 18.3% of the firm’s total loans.

Specifically, Novaland borrowed a short-term loan of VND1.85 trillion ($73.5 million) from Credit Suisse AG’s Singapore branch. This loan has a term of 42 months from the date of first disbursement, with interest rate based on the London Interbank Offered Rate (LIBOR) plus 4.25% per year paid periodically every six months. The loan is guaranteed by the total value of future-formed assets in a project in Xuyen Moc district, Ba Ria-Vung Tau province.

It also took a short-term loan of VND1.4 trillion ($55.63 million) from a third party with Credit Suisse AG’s Singapore branch as the arranger. This loan is secured by shares of the company owned by shareholders.

Besides these, the developer has a bond debt of VND7.6 trillion ($302 million), with Credit Suisse AG’s Singapore branch as the arranger and distributor. This batch of convertible bonds was issued on July 16, 2021 for international investors with The Bank of New York Mellon’s London branch as the entrusted agent.

The package has total value of $300 million with par value of $200,000 per bond, due on July 16, 2026. The bond coupon is 5.25% per year and the redemption rate is 6% per year. The bonds have no collateral and are converted into NVL shares starting from the 41st day from the date of issuance until the 10th day before the maturity date.

Vietinbank, one of four major state-owned banks in Vietnam (Big 4) has granted Novaland a short-term loan of VND1.5 trillion ($59.6 million), with an interest rate of 11% per year for the first period.

This loan is guaranteed by Novaland's entire capital contribution in a subsidiary and all land use rights and assets in Bien Hoa town, Dong Nai province.

Other banks that have provided loans to Novaland are MBBank’s Bac Saigon branch (VND2.4 trillion or $95.4 million); VPBank (VND2.46 trillion); and TPBank (VND770 billion).

Besides these, the company had short/long-term bond debts totaling VND38.66 trillion ($1.54 billion) as of June 30. The bonds were issued by securities companies like VPS Securities (VND7 trillion), MB Securities (VND6.44 trillion), Petrovietnam Securities Incorporated (VND5.89 trillion), and SSI Securities (VND3.43 trillion).

At a recent meeting on the group's restructuring and project development progress, chief financial officer Duong Van Bac said the company plans to pay off all loans and bond debts in the first or second quarter of 2026.

From now until at least the second quarter of 2025, Novaland will not focus on selling new products but will gather all resources to complete legal procedures for handing over properties and collecting money from those that have been sold, he added.

NVL closed Wednesday at VND11,400 ($0.45) per share.