Novaland’s profit surges in Q2 thanks to M&A strategy

By Phat Dat   August 4, 2020 | 02:00 am PT
Novaland achieved a consolidated revenue of VND4,361 billion ($188 million) in the first half of 2020, with profit before and after tax increasing by 12 and 48 percent year-on-year respectively.

Consolidated financial statements for the second quarter of 2020 were just released by No Va Real Estate Investment Group JSC (Novaland), which recorded a 35 percent increase in gross profit margins over the same period last year.

As of June 30, total group assets reached VND98,780 billion, an increase of nearly 10 percent compared to the balance at the end of 2019. Novaland has maintained high liquidity as shown by the current ratio of 3.52, similar to 2019, and nearly 1.8 times higher compared to the period 2016-2018. Quick ratio also reached 0.8.

In the second quarter, the company reported a 72 percent increase in profit after tax to VND874 billion. Profit after tax in the first six months increased by 48 percent to VND1,177 billion.

In the first half of 2020, the Group made repayment and early repayment for its VND 8,359 billion debts’ principal from the Group’s cash and cash equivalent, stable collection from sales and rendering of services, and cash from project transfers. The leverage ratio was complied with commitments with domestic and international financial institutions.

As of June 30, the Group's total borrowings and finance lease liabilities were recorded at VND38,088 billion, up 10 percent year-to-date. Apart from project development, Novaland is also very active in investment and divestment activities. While investment activities aim at increasing the landbank with potential for development and high price in the future; the divestment activities will be considered when the projects achieve the expected rate of return. Proceeds from project transfers will be used for reinvestment into new projects with higher profit, prepayment, preserve capital for operations, and will be the solid foundation for future growth.

The Grand Manhattan project of Novaland.

The Grand Manhattan.

For sales strategy, from the second quarter of 2020, Novaland has cooperated with a number of leading property sales agencies in Vietnam to enhance promotion and introduction of Novaland’s real estate products to customers, investors across Vietnam. Distribution partners are a bridge between Novaland and customers; through these partners, customers will have the opportunity to access Novaland's high quality, sustainably profitable projects.

In the second quarter of 2020, the company organized a number of sales events at Aqua City projects after social distancing was eased. The project recorded a positive take-up rate in townhouse, shophouse, and villas products suite with average take - up rate of up to 95 pct for every sales event, it is a positive sign for the southern real estate market that is experiencing the shortage of supply. In August 2020, the company is planning to launch a new phase of Aqua City project, with modern tropical architecture style that promises to create a great attraction from the market.

Regarding second-home segment, Novaland has developed The Wonderland at NovaWorld Ho Tram entertainment and tourism complex which was launched in June. The complex includes a commercial and service area, ocean entertainment activities, a 4-star hotel complex, and over 270 beach houses. Earlier, over 100 beachfront villas of the Tropicana were launched.

Though Group’s Board of Management said this year would be a challenging year, the long-term strategy would not change. In the medium and short term, the company will focus on projects that meet practical needs, and which are affordable to customers. The company plans to develop 22 projects in HCMC, Dong Nai, Binh Thuan, Khanh Hoa, Ba Ria - Vung Tau and hand over 10 projects to buyers.

Novaland is a large listing company in Vietnam stock exchange. In the review session in July 2020, Novaland stock (NVL) continued to be included in the top 30 largest listed companies - VN30. In addition, Novaland share again made it to Vietnam Sustainability Index (VNSI). VNSI targets standardizing sustainable development for listed companies, supporting organizations and individuals in identifying good companies for investment, boosting sustainable development in the economy, and supplying a new tool to foster the development of stock markets and the economy.

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