With the 2024 market identified as product-oriented, Nam Long Group is directing its efforts towards providing affordable housing products tailored to meet the market demand. Nonetheless, the company continues to face challenges, including inventory issues and lingering overdue debt.
Nam Long Investment Corporation (HOSE: NLG) held its annual general meeting of shareholders for 2024 on April 20, during which it approved targets for doubling its revenue and achieving pre-sales revenue of VND9,554 billion this year. During the 2024-2026 period, Nam Long Group aims to develop more than 10,000 products, with over 65% of them being affordable homes. Some of those are EHome and EHomeS (starting from VND1 billion per unit), Flora Condominiums and Floral Apartments (priced under VND4.5 billion per unit), and Valora townhouses and villas (worth under VND15 billion per unit).
2023 as the year of growth strategies
Amidst a sluggish real estate market with waning investor confidence and low liquidity, Nam Long Group achieved record revenue of over VND7,000 billion in 2023, yet still 22% below the target.
Nguyen Xuan Quang, chairman of Nam Long’s Board of Directors, said that the business results in 2023 fell short of expectations despite the company’s considerable efforts. The bright spot for the company during the year was the step-by-step implementation of growth strategies, the establishment of business models, and the adoption of international and Vietnamese standards for budget allocation to the group’s key subsidiaries. The real estate firm also consolidated a robust financial framework and diligently enhanced financial indicators.
Simultaneously, the enterprise also realized its strategy to establish two member companies, namely Nam Long Land and Nam Long Commercial Property, with advisory support from EY.
In 2023, Nam Long Group launched the “Together make housing affordable again” campaign with two criteria: offer NLG products at the most competitive prices and ensure NLG residents enjoy the most affordable amenities. This campaign received widespread support from both society and customers, resulting in increased sales volumes in the latter part of the year.
According to Quang, financial difficulties in the market emerged in 2022 and are expected to extend until 2026. Consequently, real estate enterprises will confront ongoing market challenges and need to adjust their financial structures accordingly.
“Last year, the HCMC and Hanoi markets were sluggish, yet Can Tho showed improvement. As a result, Nam Long Group concentrated on developing projects there. By year-end, over VND300 billion had been invested in land use fees in Can Tho. Our focus remains on investing in regions and products with more favorable market conditions,” Quang said.
2023 was a challenging year for the economy in general and the real estate sector in particular, due to the impacts of the global economic downturn stemming from the Covid-19 pandemic. Within the year, Nam Long Group delivered 1,609 units to customers, achieving record-high revenue of VND7,033 billion from deliveries and post-tax profit of VND484 billion, reaching 82% of the annual plan.
Based on the aforementioned results, Nam Long Group is planning to pay a 5% cash dividend for 2023 in the second quarter of 2024, with a total amount of over VND192 billion set aside for this purpose. With nearly 385 million outstanding shares, it is estimated that NLG shareholders will receive VND500 for each share held.
Additionally, the real estate developer has proposed to issue 446,276 shares under a long-term incentive program for senior executives and managers (abbreviated as the ESG program). Those shares will be subject to a one-year transfer restriction.
In 2023, Nam Long Group successfully issued bonds worth VND500 billion to Orient Commercial Joint Stock Bank (OCB).
Doubling revenue in 2024
According to Nam Long Group’s Board of Directors, the real estate market challenges will persist in 2024. First, there is a crisis of confidence, which will lead to lower liquidity and higher inventory. Second, financial challenges continue to plague real estate developers as their outstanding debts persist. Despite extensions in bond payment deadlines, these debts are expected to exert pressure on firms in the 2024-2025 period. Third, the market is still grappling with legal hindrances, triggered by slow legal procedures and overlapping laws.
However, Nam Long Group’s leadership believes that challenges will come with numerous opportunities. As Vietnam is a developing country with high economic growth, the housing demand remains high. Meanwhile, the interest rates for bank loans have sharply dropped to levels lower than those observed before the Covid-19 pandemic. With the National Assembly’s recent approval of the amended Land Law, the Housing Law, and the Real Estate Business Law, the legal environment is expected to improve, providing a solid foundation for the market’s gradual recovery.
Furthermore, the year 2024 has also brought forth opportunities to the affordable and social housing segments. Reduced interest rates for loans, new laws, and Government efforts will all serve as drivers to propel the market. The chairman of Nam Long Group believes that current interest rates are even lower than during the Covid-19 pandemic and could potentially compete with those of many other countries.
This is the basis for Nam Long Group’s expectation to overcome challenges and set a net revenue target of VND6,657 billion in 2024, doubling the figure in 2023. Its net profit target has been set at VND506 billion, an uptick of 5% compared to last year.
Nam Long said that its revenue in 2024 will mainly come from key project handovers (such as Akari, Can Tho, EHomeS Can Tho, EHomeS MR1, Izumi, Southgate), provision of project management and sales services to affiliated joint venture companies, and sale of commercial assets within projects. The company has projected its pre-sales revenue for 2024 to be around VND9,554 billion.
The real estate firm has also laid out various operational strategies for 2024 based on different orientations.
Regarding the market and products, the company focuses on developing affordable housing products that align with market demand; enhancing the implementation of sales policies; concentrating on handling inventory, overdue debts, and customer contract liquidation; boosting pre-sales; generating revenue and profit in other areas rather than residential real estate, such as equity sales, project zoning, and commercial real estate.
In terms of finances, NLG aims to balance its capital structure, maintain a healthy financial structure, and manage cash flows effectively. The company focuses on investing into project development and prioritizes allocating funds into appropriate segments. It also aims to manage loans reasonably and efficiently, as well as diversify funding sources.
Regarding project legality, the company pays attention to removing legal bottlenecks for key projects like Izumi, Paragon, and VCD Phase 2. Its leadership believes that Nam Long Group’s growth is not solely reliant on revenue and profit from residential development, but also on land reserve expansion and commercial real estate segments. These segments are poised to propel Nam Long Group’s future expansion.
In line with the roadmap towards 2030, NLG aims to accomplish 14 strategies. This year, the focus lies on three pivotal strategies: investment and investment management, comprehensive financial management (including capital mobilization), and M&A and growth. Bolstered by the appointment of a new CEO, the company is positioned to emerge as the leading innovative integrated real estate firm in Vietnam and the region by 2030.
Speaking with shareholders, Lucas Ignatius Loh Jen Yuh, the newly appointed CEO of Nam Long Group, emphasized the company’s current goal of standardizing its products and redefining the NLG brand. This could entail reevaluating the company’s position in the market and exploring opportunities for expansion into mid-tier segments and commercial real estate.
In order to implement its plans effectively, Nam Long Group must improve its ability to raise capital and optimize its funding sources. Given the ever-changing real estate market, a strong financial base is of paramount importance. In addition to maintaining long-term collaboration with its trusted partners, the group will sound out opportunities to attract investments from third parties to ensure its long-term success.
“However, it will take time to build a solid foundation for growth. Although our current efforts may not yield immediate financial results, they are crucial foundations for realizing NLG’s 2030 Vision,” said the new CEO of Nam Long Group.
