“Vinhomes Market Cap Surges by Nearly $1 Billion Following the Announcement of a $370 Million Share Repurchase”

Shares of Vinhomes JSC, trading under the ticker VHM, surged by 15% to nearly VND40,000 per share following the company’s announcement of a share buyback program involving 370 million shares, equivalent to 8.5% of the circulating shares. This move also resulted in a nearly $1 billion increase in market capitalization.

According to prior disclosures, the timing of the share repurchase was planned for after obtaining approval from the State Securities Commission, with the company disclosing information about the buyback in accordance with regulations. The transaction will be executed through either matched orders or negotiated trading.

As per the Q2 2024 financial report, the book value of one VHM share is approximately VND44,000. At the current price of VND40,000 per share, the company’s stock is still trading at a 10% discount to its book value. Based on this price, Vinhomes may need to spend VND14.8 trillion to repurchase the 370 million shares.

Vinhomes’ decision comes amidst a decline in VHM’s share price to its historical low. The company believes that the market price of VHM does not reflect its true value, and the share buyback is intended to protect the interests of the company and its shareholders.

As a result of this repurchase, Vinhomes’ charter capital will decrease by VND3.7 trillion. The reduction in circulating shares will lead to an increase in earnings per share (EPS).

In terms of business performance, for the first six months of 2024, Vinhomes’ consolidated net revenue reached VND36,429 billion. The company’s consolidated after-tax profit for the period was VND11,513 billion, primarily driven by the recognition of a large-scale transaction at Vinhomes Royal Island and ongoing deliveries at existing projects. Specifically, in Q2 2024, the company’s profit exceeded VND10,600 billion, marking a nearly 10% increase compared to the same period last year.

As of June 30, 2024, Vinhomes’ total assets and equity stood at VND494,461 billion and VND206,783 billion, respectively, reflecting an increase of 11.2% and 13.2% from the figures as of December 31, 2023.

The company’s total liabilities as of the end of Q2 2024 amounted to over VND287,678 billion, a 9.8% increase from the beginning of the year, with short-term debt accounting for the majority (VND224,583 billion). Within this, the company’s total debt stood at VND70,539 billion, representing a 24% increase compared to the start of the year.

The rise in the company’s debt was mainly attributed to an increase in bond debt. In the first half of 2024, Vinhomes successfully issued VND12,500 billion worth of bonds. As of the end of Q2 2024, the company’s total bond debt stood at VND27,779 billion, of which VND5,921 billion in bonds were due for repayment.

In a recently published report, DSC Securities indicated that in the last six months of the year, VHM is expected to recognize revenue from approximately 65% of the unrecorded sales value of the old project group (~VND50 trillion) along with a small portion from the Vu Yen project (~VND10 trillion). DSC forecasts Vinhomes’ revenue and after-tax profit for 2024 to reach VND95,220 billion and VND30,470 billion, respectively, representing an 8% and 9% decrease compared to 2023.