Novaland Group (NVL), chaired by Bui Thanh Nhon, posted a record profit of over 2,950 billion VND ($120.4 million) in Q3/2024, a dramatic turnaround from the 7,300 billion VND loss it reported in the reviewed H1 2024 financial statement. What’s driving this shift at one of Vietnam’s top real estate firms?

In its Q3 2024 financial report, Novaland noted that strong financial revenues contributed to its substantial profit, reaching levels 21.6 times higher than the same period last year.

In late September, the company’s revised H1 2024 report shifted from a 345 billion VND profit to a 7,327 billion VND loss. This shift stemmed from additional financial provisioning and accounting adjustments suggested by auditors, primarily related to land lease fees and other financial obligations tied to a 30-hectare project in Nam Rach Chiec, An Phu Ward, Thu Duc City.

Additional factors, including currency valuation losses on foreign debt and divestitures of subsidiary holdings, also contributed to the initial H1 loss. Auditors even raised concerns regarding Novaland’s ability to continue operations.

This record Q3 profit comes at a time when NVL shares are at historical lows, around 10,000 VND per share, while the company faces pressure to supplement collateral for its billion-dollar bonds as per bondholder requirements. NVL shares were also flagged due to delays in submitting the reviewed H1 2024 financial report.

As per regulations, the Q3 2024 financial report is unaudited, meaning the reported figures are final for now. Audits will resume in Q4 and the full-year report.

Financial operations drive Q3 profit

Novaland explained that its Q3 profit surge was largely due to increased financial revenue, which included approximately 3,045 billion VND in financial revenue for H1 2024 that was initially reduced by auditors in the H1 review but was fully realized in Q3.

Moreover, financial expenses dropped from 1,288 billion VND in Q3 last year to about 319 billion VND, further boosting NVL's profits.

For Q3, Novaland’s revenue reached over 2,010 billion VND, up from 1,073 billion VND in the same period last year.

However, due to the significant H1 loss, NVL’s cumulative nine-month figure shows a net loss of 4,377 billion VND.

As of late September, Novaland’s total assets stood at over 232 trillion VND, with short-term debt around 37.7 trillion VND and long-term debt close to 22.2 trillion VND. Total bond obligations reached nearly 39 trillion VND.

NVL’s tax and other state payments increased eightfold since the start of the year, now totaling 7,800 billion VND.

According to Novaland, over 1,200 villas have been delivered at NovaWorld Phan Thiet, of which more than 600 have completed interiors and are in use. NovaWorld Ho Tram has delivered over 400 villas, and Aqua City in Dong Nai has handed over more than 650 townhouses.

In recent months, NVL shares fell to around 10,000 VND, down from over 18,000 VND in early April and nearly 90,000 VND (adjusted price) in September 2022.

Following the Q3 profit announcement, Novaland requested the State Securities Commission lift its stock warning.

Earlier, NVL shares were placed on the HoSE non-marginable list due to delays in disclosing the reviewed H1 2024 financial report.

On October 30, NVL stock saw a mild recovery, closing at 10,700 VND per share.

NovaGroup, the parent company, completed the sale of over 3 million NVL shares on September 6, reducing the ownership of Bui Thanh Nhon and related stakeholders to below 39%.

Since the start of 2024, NovaGroup has sold over 36 million NVL shares. Over the past two years, Nhon’s affiliated stakeholders have divested more than 400 million NVL shares.

Manh Ha