NVL, PDR 2024: Choose cheap stocks or businesses with no bond debt?

Although PDR (HM:) stock is up more than 150% to express its “gratitude” to shareholders who “hunted the bottom” more than a year ago, Novaland (HM:) stock is still 30% below its current price. The emphasis is on “being rescued.” SecuritiesNVL, PDR in 2024: Choose cheap stocks or companies with no bond debt? Quynh Trang • January 6, 2024 16:46 Although PDR stock has been “thankful” to shareholders who “hunted the bottom” a year ago, with an increase of more than 150%, Novaland’s stock price is still 30% lower than when it was “rescued.”

Real estate market outlook over the past year

After experiencing significant fluctuations in the previous year in 2023, 2024 will be a year for real estate companies to overcome the aftershocks and advance restructuring activities and project mergers and acquisitions.

In order to overcome difficulties and obtain bank loans, in recent years, many companies have planned (or even implemented) additional stock issuance activities and actively raised funds on stock exchanges.

It is undeniable that the most difficult period for real estate companies has passed, and the directions and policies of the government and various ministries are gradually being absorbed.

>> Prime Minister calls to ask the National Bank to promote loans to real estate companies

Wichart.vn statistics show that in the third quarter of 2023, the profit of the real estate group in the building recorded approximately 14.86 trillion VND – an increase of 11% from the previous quarter, but a decrease of nearly 29% from the previous quarter.

It is worth mentioning that most of the real estate companies that achieved performance growth in the last quarter came from the handover records of past projects. While some companies have experienced revenue growth, their accounts receivable have also increased significantly. As inventories continued to increase, the net cash flow generated by many companies’ operating activities during the period became negative.

According to analyst predictions, the real estate market will need to wait until the second quarter of 2024 to see more obvious positive changes. “What products will be offered to the market in 2024? Do they belong to the right market segment and meet the demand? This is a factor that remains to be seen and is key to evaluating the market. Can it recover?” one expert commented.

From another perspective, the reason why the second quarter of 2024 is considered to be the time when the real estate market and real estate companies return to the “new normal” state is because of the convergence of three factors: a sharp decline in deposits, credit growth, and real estate growth. The policy was relaxed.

Ms. Nguyen Quynh Trang, investment consultant at VPS Securities, said: “For the market to reverse significantly, it still needs to explore, adapt and integrate.”

The story of Novaland and Phat Dat

As shared at the 2023 Annual General Meeting, at the end of December, the leadership of Phat Dat Real Estate Development Joint Stock Company (ticker PDR – HoSE) fulfilled its promise to shareholders – completely wiping out outstanding bonds. Debt is 0 VND).

Against the backdrop of a sluggish real estate market, new projects are limited and sales of old products are slow, putting pressure on bad debts in the bond market and the entire banking system.

Phat Dat is one of the few real estate companies on the stock exchange to have completely eliminated its bond debt when it just bought back all 2 tranches of bonds with a total value of VND800 billion. In other words, Phat Dat is gradually returning to a stable business trajectory as cash flows in, concession projects continue to open and it no longer faces bond pressure.

>> Phat Dat (PDR) 2023: No bond debt, shares doubled, Mr. Nguyen Van Dat returns to the top 10 richest people on the stock exchange

As was the case with Phat Dat Real Estate, which also saw a series of bottom-line declines in the middle of the fourth quarter of 2022 that wiped out tens of percent of its share price, the situation with No Va – Novaland Real Estate Investment Group Joint Stock Company (ticker NVL – HoSE) is very different.

2023 is the year when Chairman Pei Qingren’s company is in trouble of restructuring and debt repayment, and there is not much room to develop new projects. In the near future, Novaland will face pressure on bonds maturing in 2024-2025.

At an online meeting to implement the Prime Minister’s Telegram to solve problems in the real estate market in mid-November 2023, Novaland Chief Financial Officer Mr. Duong Van Bac said that the group has passed the difficult period. 80% of the way is restructuring.

Recently, Novaland’s board of directors announced the resolution of the 2023 Extraordinary General Meeting of Shareholders, approving the capital increase plan of issuing nearly 1.32 billion shares (including 200 million individual shares of professional securities investors), increasing capital to the enterprise and approximately 1.17 billion shares. for existing shareholders). The issuance price of both forms is not less than VND10,000/share.

>> After nearly 2 months, the major shareholder’s shareholding in NovaGroup has reduced its losses by dozens of percent.

Along with the plan to issue shares to raise funds, NVL has repeatedly adopted plans to replace bond debt with real estate in order to solve difficulties in recent times. But it needs to be emphasized that the effectiveness of this program is not high.

As of the end of the third quarter of 2023, Novaland’s outstanding bond debt decreased by only 10% (from VND43 trillion to VND40 trillion).

Investment Views on NVL and PDR Stocks

After a slump in the middle of the fourth quarter of 2022, 2024 will be the year Novaland leadership delivers on its “commitment to work hard to compensate customers and shareholders.”

Although PDR’s stock price has increased by more than 150% to “thank” shareholders who “hunted the bottom” more than a year ago, Novaland’s stock price is still 30% lower than it was more than a year ago. It should be emphasized that the rapid rise from mid-July to early September 2023 once pulled NVL to 22,000 VND/share, and was subsequently adjusted to 17,050 VND/share (at the end of the year).

Suffice to say, as of now, NVL shares have (perhaps) not “rewarded” the shareholders who participated in rescuing the 18.x-25.x VND floor more than a year ago (?).

However, what can excite investors at this stage is that NVL is trading in cheap valuation territory.

Within the 27.x price range, Phat Dat stock trades at a P/E ratio of 2.43 times. Meanwhile, NVL trades at a price-to-earnings ratio of just 0.9 in a price range of 16.8 times. The future story of Novaland may come from the anticipation of actual settlement of large-scale projects such as Aqua City and Noval World Phan Thiet. However, there is still a question mark as to when these projects will be dismantled and bring in significant revenue?

>> Novaland (NVL) welcomes 65,000 new shareholders after a year, but many shareholders still have “tragic consequences”