Blockbuster deal in 2021: IPO of Vietnam's No. 1 real estate brokerage

March 30, 2021 | 14:30
More than 1,000 guests, including individual investors, financial institutions, securities companies, and experts in the real estate industry attended the "IPO DXS – Blockbuster deal 2021" event by Dat Xanh Real Estate Service JSC, held in Ho Chi Minh City on March 29.
blockbuster deal in 2021 ipo of vietnams no 1 real estate brokerage
Dat Xanh Services meet with investors before listing shares on HSX, expected in May 2021

This is one of the most critical activities in the information disclosure roadmap to all investors and the public for the initial public offering (IPO) of Dat Xanh Real Estate Services JSC (Dat Xanh Services – DXS).

At the event, the representative of DXS's Board of Directors stated that the enterprise offers more than 71.66 million shares, equivalent to 20 per cent of the capital after the issuance. The existing shareholders offered to sell more than 35.8 million shares and issued a maximum capital increase of 35.8 million shares to new shareholders. The announced IPO price of DXS is VND32,000 ($1.39) per share. Investors can start to buy shares through distributed securities companies from March 31 to April 20. DXS shares are expected to be listed on the Ho Chi Minh City Stock Exchange (HSX) and have the first session right in May 2021.

Many financial and securities experts have appraised that the IPO of DXS is the greatest public offering of 2021 in real estate services. Especially in the context of trading volumes and index peaking on the stock market over the last four years, DXS has attracted even more attention from investors.

blockbuster deal in 2021 ipo of vietnams no 1 real estate brokerage
Investors were keen to hear about Dat Xanh Services' performance

DXS possesses the largest brokerage system and market share in Vietnam with very impressive business results, with the revenue and profit growth rates in the last four years are consistently over 44 per cent each year. Besides, the current brokerage segment is expected to rebound in growth after the COVID-19 situation is brought control, one of the highlights gaining the market's attention.

By the end of 2020, DXS has a capital of VND3.225 trillion ($140.2 million), a subsidiary owned by Dat Xanh Group (DXG), which holds 84.2 per cent of the capital. In case the offering is successful, DXS' charter capital is estimated to increase to about VND3.583 trbillion ($155.8 million). This capital will be used for developing technology platforms to complete the One-stop Platform strategy; implement marketing, promotion, and user development programmes in the resale market, real estate financial services, and property management services.

According to some experts, DXS' valuation is attractive based on the industry average price per earning (P/E) ratio of real estate service companies ranging from 10.0x to 13.0x, equivalent to DXS valuation of VND41,000-54,000 ($1.78-2.35) per share, much higher than the announced offering price. Therefore, DXS' IPO is considered a very remarkable investment opportunity in 2021.

A comprehensive real estate service ecosystem

Also, at the event, DXS' Board of Directors shared a breakthrough business plan in 2021 with the expectation of nearly VND7.6 trillion ($330.43 million) in revenue and VND1.483 trillion ($64.5 million) in after-tax profit, and the parent company's shareholders (up respectively 134 and 69 per cent compared to 2020). The company aims to build a comprehensive real estate service ecosystem to meet all needs in the housing sector, including transfer and lease.

Answering questions on what basis to set the revenue level is much higher than that of other companies in the same industry. The Board of Directors of Dat Xanh Services stated that the company now has the advantage of a nationwide distribution system, serving diversified investors, sufficient sources of products, and pioneering technology applications to save expenses. The feature of comprehensive brokerage service sharing benefits and the prospect of price increase with investors has brought the DXS system's distinct advantage compared to other companies in the same industry.

blockbuster deal in 2021 ipo of vietnams no 1 real estate brokerage
Nguyen Truong Son, general director of Dat Xanh Services directly answered questions of investors attending the event

Regarding the upcoming development orientation, the Board of Directors of Dat Xanh Services also shared the goal of becoming a pioneer in providing closed products and services in the real estate service ecosystem. The four key objectives are investing in perfecting and strengthening real estate technology platform; investing in developing resale real estate brokerage; investing in developing other real estate services such as building management, rental management, financial services through M&A, and capital contribution to subsidiaries.

DXS has been operating since 2003 as the real estate brokerage department of Dat Xanh Group, which currently holds DXG's real estate services. DXS is the largest real estate service company in the country, holding about 30 per cent of the market.

Since 2007, DXS has built a database of more than 7.5 million clients with an annual sales volume of more than 30,000 products. DXS now owns a nationwide distribution network with the largest sales force, including 132 exchanges and about 7,000 sales executives.

Therefore, in 2018-2020, DXS achieved a compound annual growth rate (CAGR) of 14.5 per cent of revenue. In 2020, DXS will invade real estate financial services, including mortgage brokerage, insurance brokerage, and property management. In 2020 alone, DXS had VND3.249 trillion ($141.26 million) in revenue.

By Ngoc Hang

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