Novaland Group JSC (coded NVL on HoSE) has recently announced a delay in bond payments.
On August 27, Novaland notified a delay in interest payments for two bond batches, NVL2020-03-140 and NVL2020-03-190, totaling VND 18 billion, due to a temporary lack of funds. The company assured that the payment would be made on September 5.
Subsequently, on August 29, Novaland also disclosed a delay in interest payments for another two bond batches, NVL2020-02-350 and NVL2020-03-240, totaling VND 32 billion, for the same reason. The company plans to make these payments on September 11.
For the second quarter of 2024, Novaland reported a net profit of VND 941 billion, a significant increase compared to the loss of VND 634 billion in the previous year. This profit is the highest in the past nine quarters, despite a modest revenue of over VND 1,549 billion.
The primary reason for Novaland’s substantial profit in the last quarter was its financial investment activities. Specifically, the company’s financial revenue reached VND 3,951 billion, more than five times higher than the same period last year. This increase was mainly due to profits from cooperation investment contracts, amounting to VND 2,885 billion.
As of June 30, Novaland held over VND 2,100 billion in cash and cash equivalents. These funds are used as collateral for loans and guarantees amounting to VND 61 billion (VND 63 billion as of December 31, 2023). Additionally, VND 768 billion (VND 853 billion as of January 31, 2023) of these funds are managed by the lending bank for specific project purposes.
As of June 30, the Group had short-term bond debt of VND 16,439 billion (maturing within 12 months) and long-term bond debt of VND 22,221 billion.
On July 30, NVL held a meeting to provide updates on its debt restructuring and project progress. VCSC attended the meeting and shared details regarding NVL’s disclosures on debt restructuring progress and project development.
Debt Restructuring: Since late 2022, NVL has been engaged in debt restructuring through negotiations to extend payment deadlines, asset swaps, or handling of pledged/mortgaged assets. According to the management’s disclosure at the July 30 meeting, total debt as of the second quarter of 2024 was VND 54,600 billion (reflecting bonds with agreed-upon solutions or plans with bondholders/partners), a 1.4% decrease from the beginning of the year and a 13% decrease compared to the end of 2022.
Legal Status of Key Projects: The management expects further progress in resolving current legal obstacles for key projects such as Aqua City, Novaworld Phan Thiet, and Novaworld Ho Tram in the second half of 2024.
Collection Progress: As of the second quarter of 2024, NVL has collected a total of VND 132,000 billion, with Aqua City contributing 48%, Novaworld Phan Thiet 28%, Novaworld Ho Tram 11%, and other projects in Ho Chi Minh City 12%.
According to the management, the remaining amount to be collected is approximately VND 100,000 billion (based on the total number of sold products).
Company Focus: In the second half of 2024 and 2025, NVL will continue to finalize legal procedures to commence construction on developing projects, restore trust among homebuyers, focus on construction and handover of sold units to collect payments, and continue debt restructuring and new capital mobilization.
The management anticipates a significant recovery in the residential real estate market in the first half of 2026, creating more favorable conditions for NVL to launch new sales plans.
Thus, VCSC believes that NVL’s debt restructuring, resolution of legal issues, construction progress, and restoration of homebuyer confidence will take time.
In 2025, VCSC expects NVL to remain focused on debt restructuring, including negotiations with bondholders for deadline extensions or asset swaps, and gradually resolving legal issues and construction to deliver sold units to customers.
The primary risks to VCSC’s view are homebuyers’ delayed payments, challenges in capital mobilization to finance debt obligations in 2025, and potential dilution from the issuance of purchase rights and private placements.
The detailed plan for the issuance of shares is as follows:
1. Rights Issue Plan (approved by shareholders in December 2023): Issuing a maximum of 1.17 billion shares (60% of outstanding shares) at a minimum price of VND 10,000/share to existing shareholders. The issuance ratio is 10:6 (meaning that for every 10 shares held, shareholders can buy up to 6 new shares). The rights issue will be given priority before any other offering.
2. Private Placement Plan (approved by shareholders in December 2023): Issuing a maximum of 200 million shares (10.2% of outstanding shares) at a minimum price of VND 10,000/share to professional investors.
3. 2023 ESOP Plan (approved by shareholders in December 2023): Issuing a maximum of 1.5% of outstanding shares at the time of issuance at a minimum price of VND 10,000/share; with a one-year lock-up period.
4. 2024 ESOP Plan (approved at the 2024 AGM): Issuing a maximum of 3.5% of outstanding shares at the time of issuance at a minimum price of VND 10,000/share; with a one-year lock-up period. The issuance is expected to be completed by the end of 2025.
If the rights issue and private placement are fully subscribed at the minimum price of VND 10,000/share, NVL can raise a total of VND 13,700 billion through equity to restructure debts, pay off maturing debts, and develop projects.
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