HDG – Brief – [NONRATED] – Earnings weighed down by provisions

In 1Q26, revenue reached VND684bn (+14% yoy, -23% qoq, figure 1), mainly driven by the real estate segment and hotel services. Gross profit came in at VND442bn (+10% yoy, figure 2), with gross margin at 64.6% (-2.4%p yoy).

• Power segment: Revenue and gross profit were VND508bn (-1% yoy, figure 1) and VND354bn (-4% yoy, figure 2), respectively. We estimate the capacity factor declined by ~4% yoy due to the intensifying impact of El Niño, despite flat electricity prices yoy.
• Real estate segment: Revenue and gross profit reached VND49bn (no revenue in 1Q25, figure 1) and VND43bn (+150% yoy, figure 2), respectively. We believe Charm Villas Phase 3 recorded sales of 2 units (a plan of 25 units).
• Hotel services: Revenue was VND45bn (+22% yoy, figure 1), supported by improved occupancy at the IBIS hotel chain to 82% (1Q25: 75%) and ~10% yoy growth in average room rates. Gross profit increased to VND28bn (+34% yoy, figure 2), with gross margin expanding to 61.4% (+5.7%p yoy).
• Real estate leasing & services: Revenue reached VND87bn (+10% yoy, figure 1), while gross profit declined to VND22bn (-28% yoy, figure 2), resulting in gross margin contraction from 38.5% to 25.2%, mainly due to higher depreciation and operating costs.

As a result, NPAT was VND104bn (-50% yoy, figure 4), primarily due to a sharp increase in administrative expenses to VND258bn (4.7x yoy, figure 3), driven by provisioning for the Infra 1 project.