DXG_BUY_TP 38,300 VND_Upside 36.7%_Unlock key project Gem Riverside_BSC Company Update_130822

Valuation

Compared to the latest BUY report on February 23, 2021, DXG price recorded a strong correction similar to the market after reaching our previous target (details on page 7).

BSC recommend a 1-year target price of 38,300 VND/share (+36.7% compared to the closing price on 12/8/2022) and maintains a BUY recommendation for DXG based on changing some assumptions: (1) Apply 20% discount due to industry and market risk factors on RNAV (2) increase WACC cost of capital to 13% from 11.5% due to interest rate increase, and (3) adjust selling prices of some projects at market prices (Gem Riverside, Gem Premium).

Business Performance Forecast

     BSC revised down our forecast of DXG revenue and profit in 2022 to 10,691 billion VND (+6% YoY, -11% compared to the latest forecast) and parent company's profit after tax of 1,274 billion VND (+10%) YoY, -13% from last forecast). EPS FW 2021 = 2,115 VND. PE FW 2022 = 13.8 times, PB FW 2022 = 1.7 times. The adjustment mainly due to the influence of the brokerage segment in the context of the quiet real estate market from Q2/2022.

Catalyst

• Launching and selling Gem Riverside project in Q4/2022
• Successfully offered the convertible bond issuance plan in Q3/2022.

Risks

• The plan to open and sell projects has been delayed due to legal issues and the Covid-19
• General real estate industry risks (interest rates, industry cycle)

Business Updates

• Revenue and profit after tax of the parent company of DXG in the first 6 months of 2021 reached 3,342 billion VND (-49% YoY) and 402 billion VND (-51% YoY), completing 30% and 29% of the revenue target and profit set.
• Total opening value in the first half of 2022 is estimated at about 100 million USD, completing 25% of the set plan. The ability to complete the plan will depend on the sale of the Gem Riverside project.