Decrypt Cenland before the listing hour

Cenland's Charmington Iris project

Before listing 50 million shares representing a charter capital of VND500 million (VND21,801) on the Ho Chi Minh City Stock Exchange (HSX) in the middle of July 2018, Cenland will hold roadshows in Thailand, Hanoi, and Ho Chi Minh City to promote the investment opportunities.

Cenland will be the first real estate brokerage firm in Vietnam to be listed. On what basis did the two investment funds VinaCapital and Dragon Capital assess that Cenland is worth more than $80 million to spend $21 million on 25 per cent of its stocks ?

Hold 20 per cent of real estate brokerage shares

Cenland was founded in 2002 as an affiliated company of Century Group Joint Stock Company (Cen Group). The company now owns the Real Estate Project Supermarket System (STDA). In 2017 the company reconstructed and acquired Worldstar Land JSC (nghemoigioi.vn), CEN SaiGon Real Estate Joint, and Rising Star Media JSC.

In 2017, Cenland has staged its initial public offering (IPO) and offered shares to increase capital in early 2018. To be more specific, the company has conducted three stock sales, increasing its charter capital from VND250 billion ($10.9 million) to VND500 billion ($21.8 million).

So far, Cenland holds 51.15 per cent of the stakes, while VinaCapital has announced that Vietnam Opportunity Fund (VOF) has invested $10 million on the condition that the company has to ensure the high-efficiency of its activities and will list their shares in the third quarter of 2018. The investment was made through Menzies Holding Ltd. (Singapore), which holds 12 per cent of CenLand’s stocks.

Before that, Dragon Capital’s funds have purchased 13 per cent of the stocks from the company for $11 million.

Thus, by spending $21 million for 25 per cent of the stocks, Cenland is currently estimated to worth more than $80 million. The Price to Earning Ratio (P/E) of the company’s shares is currently around 10 times—quite an attractive rate in the market.

According to Andy Ho, VOF’s investment director, the company’s good relations with real estate investors bring significant competitive advantages.

“We hope that the company will grow stronger in the secondary brokerage market, which offers many opportunities to develop and boost sales through Internet-based channels,” he said.

Nguyen Tho Tuyen, Cenland’s general director, stated that, “Plenty of investors from inside and outside the country paid attention to the IPO. After numerous negotiations, Cenland has chosen VinaCapital and Dragon Capital not only because of the good prices offered, but also because they are experienced strategic investors in the Vietnamese market and promise to accompany Cenland in the long term and contribute to Cenland’s development in the near future.”

Why is Cenland noticed?

The difference between Cenland and other rivals is its efficient brokerage activities. In 2017, the company has made 11,555 brokerage transactions, equivalent to approximately 40 per cent of the real estate brokerage market in Hanoi and 20 per cent nationwide. In 2017 the company earned VND1.115 trillion ($48.6 million) of net revenue, up 84 per cent against the previous year, while after-tax profit reached more than VND253 billion ($10.02 million), an increase of nearly 88 per cent compared to 2016.

At the end of 2017, the company had an earnings per share (EPS) of VND11,970 in total. The return on total assets (ROA) and return on equity (ROE) were at the highest, with ROE reaching 55.14 per cent.

The company now has a big real estate distribution channel, with more than 2,700 employees, 20 direct trading offices around the country, linking with more than 700 real estate exchange offices nationwide, and online sales systems through Project Supermarket, the nghemoigioi.vn website, among others.

Cenland’s partners are big real estate companies, such Vingroup, FLC Group, and Tan Hoang Minh Group, among others, and foreign investors like Hyundai, CapitaLand, and Indochina Land.

What sets Cenland apart from rivals is its service pattern. The company does not follow the simple real estate brokerage pattern, but provides services covering the field’s entire value chain, cooperate with real estate development firms in a range of activities from exploring the market and marketing to product design consultancy, and cooperates with investors in the form of secondary investment or distribution from the early stages of the project.

“With the successful IPO, Cenland is not merely a brokerage unit, it became a sales management company and operates a sales system,” Nguyen Tho Tuyen insisted.