Ending the transaction on September 27, HPX share price of Hai Phat Investment JSC (Hai Phat Invest) revolved around the landmark of 27,000 dong/share, slightly higher than the reference price for the first trading session 2 month ago. Is this price suitable for investors who are “down money”?
What does Hai Phat have?
Regarding “sense” as well as purely according to the basic financial indicators, the price can be found to be much cheaper than the market price of many other real estate stocks such as VPI, NLG, DXG, KDH …
HPX’s meeting with investors on September 26 attracted a lot of investors’ questions.
But is that why Dragon Capital decided to hold a large amount of HPX shares before this stock is listed? According to Dragon Capital’s portfolio, real estate stocks accounted for the largest proportion, with 27.34% of the investment portfolio as of the end of June 2018.
According to Hai Phat’s Board of Directors, this fund assessed that the demand for real estate in Vietnam is very large and this made them focus on investing in real estate businesses. In addition, this Fund will select enterprises to create a land fund (with a favorable position, reasonable cost) and have the ability to implement projects on schedule, with quality, ensure full after-home purchase services as well as good risk management.
Necessarily, because according to the Ministry of Construction statistics, as of June 20, 2018, the total value of inventories is about 24,072 billion dong, down by 81% compared to the peak in 2013 and 4.29% lower at the end of 2017. These are positive signs for the market, showing a recovery from the demand while investors are more and more experienced in project development and have a better balance plan for the needs of the market.
According to CBRE’s forecast, in 2018, there will be about 32,000 apartments offered for sale in Hanoi, decrease 10% compared to 2017. However, sales are expected to reach 28,000 units, up about 9% compared to 2017 and concentrated in the mid-end segment. Meanwhile, the first half of 2018, there were 15,334 apartments for sale from 23 projects in Hanoi. Most projects opened for sale in this period are located in the western area of Hanoi, accounting for more than 50%. This is the most dynamic development area with the booming real estate market thanks to the synchronous investment infrastructure, with many key infrastructure projects being implemented and gradually improved, especially the traffic system. The number of affordable and mid-end apartments is overwhelming.
Meanwhile, Hai Phat Invest owns a clean land fund, which is a headache for real estate development enterprises, concentrated in the West of Hanoi and some other provinces. This land fund is considered to be in a suitable position to the business strategy and housing development of the mid-end segment in the west of Hanoi because of high demand and liquidity. Hai Phat aims to collect 10,000 hectares of land by 2020 by implementing BT projects, investment cooperation and M&A of existing projects. In the future, HPX aims to focus on ground and low-rise houses in suburban areas of Hanoi, developed provinces and cities such as Thai Nguyen, Thai Binh, Thanh Hoa, Khanh Hoa, Da Nang, and Hoi An. Binh Thuan and Can Tho.
Particularly in 2018, Hai Phat has marketed products mainly in the high-rise segment and the ground. In there, The Vesta project currently handed over 6 buildings out of a total of 8 buildings, the other two will be handed over in the first quarter of 2019. Roman Plaza project is currently in progress and is expected to handover on schedule and expected to open the next batch of apartments on September 29 and hand over before June 2019. The Trau Quy auction land project will complete the rough houses and handover the adjacent part before December 31, 2018. Associated projects such as HPC Landmark 105, Hanoi Homeland Long Bien reach sales targets. Phu Luong project is undergoing rough construction and finishing on the outside, expected to be handed over before December 31, 2018.
With that progress, especially the point of profit drop will be in quarter 4/2018, Mr. Doan Hoa Thuan – Hai Phat General Director said that the whole year will complete the set target of 460 billion dong after-tax profit, in which in the last 6 months, it is 280 billion VND. “Hai Phat has developed specific plans to achieve this plan, ensuring the handover schedule for customers and ensuring investors’ benefits” – Mr. Thuan affirmed.
Mr. Doan Hoa Thuan – Hai Phat Invest General Director (HPX)
In 2019, Hai Phat’s revenue is expected to reach the target of over 4,000 billion VND and after-tax profit of 720 billion VND.
Currently, Hai Phat is also expeditiously completing procedures, investing and putting into operation of TM1 Nha Trang, SEA Thuan Phuoc, Golden Beach Binh Minh projects, high-tech eco-garden garden area. Dong Quang phase 2, etc. The company also diverges appropriate investment to carry out construction investment, business of exploiting component projects / subprojects of projects such as Tay Nam An Khanh urban area, Association of multi-functional cultural parks. An, Tourist Service Center Ham Tien Mui Ne – 198ha, etc. On that basis, Hai Phat will have a specific plan for each project, each year to achieve estimated revenue in 2022.
Which price is suitable for HPX?
In the context of implementing many projects, the loan structure of Hai Phat is also quite high when the debt-to-equity ratio at the end of June 2018 was 76.32%, but it also significantly decreased compared to 91.76% in 2016 and especially, the debt structure is mainly medium and long term. In return, HPX’s performance is also high when it achieves a return on equity (ROE) of 19.32% in 2017, much higher than other companies in the same industry.
However, investors also expressed concern when Hai Phat deployed many projects at the same time, while the real estate market in the next 3 years may not grow as strong as the last 2 years due to inflation and the Government tightens credit for this field.
In this regard, Mr. Thuan said that enterprises must adapt to the operating policies of the Government. In order to improve financial capacity, Hai Phat has a plan to increase capital from 1,500 billion VND to 2,500 billion VND.
Accordingly, this year, Hai Phat will increase its capital from 1,500 billion VND to 2,500 billion VND in 2 phases. The first phase is from 1,500 billion VND to 2,000 billion VND by issuing bonus shares, stock dividends to shareholders at a rate of 15%, expected to be completed in October. The second phase is at the end of the year, Hai Phat will continue to raise capital to 2,500 billion VND according to the suitable plan.
In addition, Hai Phat also issues 1,000 billion VND of bonds from investment funds or private investors, not just from credit institutions. Currently, the company has mobilized 240 billion dong and is expected to mobilize in the next quarter.
On the market, ending the trading session on September 26, HPX share price is still around 27,000 dong/share, equivalent to the reference price for the first trading session 2 months ago.
Explaining shareholders’ questions about liquidity and stock prices, Mr. Thuan said that HPX shares are undervalue (under real value) and a good opportunity to invest. “HPX liquidity will continue to improve when being granted margin in the coming time and that is also the time when Hai Phat announced Q4 business results as well as 2018”.
It is possible to rely on various methods to value stocks. According to ACBS, if Hai Phat completes its business plan in 2018, valuing HPX shares by P / E and P/B method is about 32,175-35,180 VND/share.
In general, Hai Phat is a well-known real estate development company in Hanoi with a large land fund (over 5,000ha), a strong sales team (Hai Phat Land has about 1,500 employees and accounts for 7-8% real estate brokerage market share in 2017). Therefore, investors may not need to wait until the end of the fourth quarter when having the whole year business results as well as stocks granted the margin as stated by HPX General Director to pour money into this stock code?
Currently, Hai Phat has 3 major shareholders holding a total of 56.77% capital, including 2 domestic individuals and VEIL investment fund of Dragon Capital. In addition to VEIL, there are 3 foreign organizations holding a total of 6.26% of Hai Phat’s, they are Aquila SPC Ltd, Idris Ltd and Amersham Industries Limited.
(According to Minh Anh of Vietstock at link: https://vietstock.vn/2018/09/co-phieu-hai-phat-invest-dang-re-hon-trong-so-sanh-nganh-737-630741.htm ? fbclid = IwAR1cE1NXp0Vbh5wJbDWsna2faaNNpwZ4-vKuCutGQ6JrCF8BqRJ9iU5UDxw)