Costs eat up profits
Novaland has just announced its Consolidated Financial Report for the fourth quarter of 2024, showing that Novaland's net revenue and financial revenue for the whole year of 2024 increased by 91% and 16% respectively compared to the previous year, to more than VND 9 trillion and more than VND 5.9 trillion.
Of which, net revenue from real estate transfer is nearly 8.4 trillion VND, double that of 2023. Interest from lending is also more than 2.2 times higher than last year, with nearly 1.5 trillion VND.
Although revenue increased, Novaland's expenses increased even higher. For example, the cost of goods sold increased 2.6 times compared to last year, with nearly 9 trillion VND.
Financial expenses and selling expenses increased by 45% and 87%, respectively, to over VND4.7 trillion and VND546 billion. Most notably, the loss of over VND797 billion from the divestment of its subsidiary, Huynh Gia Huy Joint Stock Company, caused financial expenses to increase significantly.
High costs made Novaland's efforts to make a profit last year unsatisfactory, causing Novaland to record a net loss from business operations of more than VND636 billion.
Not stopping there, Novaland's fines in 2024 all increased dramatically, causing the company to incur another loss of nearly 1.9 trillion VND.
Thus, at the end of fiscal year 2024, Novaland's after-tax profit will be negative VND4,351 billion. The parent company's after-tax profit will be negative more than VND6.4 trillion in 2024.
At the end of the year, the report showed that Chairman Bui Thanh Nhon did not receive a salary, but he received a remuneration of 1.2 billion VND, the highest in the Board of Directors, and an increase compared to the figure of 1.1 billion VND of the previous year.
Mr. Ng Tech Yow, who held the position of General Director for a short time (resigned on November 1, 2024), received a salary of nearly 4.3 billion VND, equivalent to a monthly salary of nearly 430 million VND for this former Malaysian CEO.
Bond debt burden has not decreased
Novaland (code NVL) is still accelerating the restructuring process with a focus on restructuring debts, especially bond debts. The company is implementing two parallel solutions to convert bond debts into shares and arrange cash flow to buy back bonds before maturity.
With the international bond lot worth 300 million USD issued in 2021, Novaland has approved the conversion price of 36,000 VND/share, the fixed exchange rate at the time of conversion is 24,960 VND/USD and can be adjusted according to related conditions.
This bond package is unsecured, has an initial maturity of 2026, and is convertible into common shares.
The initial conversion price is VND 135,700/share - 15% higher than the closing price of NVL shares on the bond offering date and the conversion right exercise ratio is 33,916 shares/bond.
However, in December 2023, after some violations of terms, Novaland successfully negotiated with bondholders, extending the bond maturity date to June 30, 2027, and adjusting the price and conversion rate.
From another perspective, Novaland plans to buy back up to VND7,000 billion in advance of maturity for 21 bond lots issued since 2020.
These bonds have a term of 60 months (extended twice, from the original 36 months), and will begin to mature in June 2025 for principal payments. A portion of the bonds are overdue for interest payments. It is expected that by January 30, 2025, the company will negotiate with bondholders to buy them back at a price equal to 100% of the face value, plus interest accrued up to the date of early repurchase.
