Novaland, trading under the ticker NVL on the Ho Chi Minh City Stock Exchange, was established in 1992. Novaland develops residential, commercial, and industrial properties. The company’s portfolio ranges from luxury homes to large-scale developments.
Aggressive expansion and debt-fueled growth have led to liquidity issues and financial difficulties for Novaland. To fund crucial projects, the company issued US$300 million in bonds on the Singapore Stock Exchange in July 2021. Notably, this was achieved without collateral or warrants, with the bonds set to mature in 2026. This move came after a remarkable 2.5-fold increase in the company’s stock price between January and June 2021.
By the end of 2022, however, a broader market slowdown and tighter credit conditions created significant headwinds for real estate developers, including Novaland. The firm’s stock price fell sharply in late 2022 losing approximately 90 percent of its value.
Over the past three years, the real estate market has experienced a freeze, and legal challenges surrounding several projects have contributed to a decline in the company’s revenue and profit.
Notably, Novaland defaulted on its repayments on the aforementioned US$300 million worth of bonds several times last year.
That said, Novaland has been actively seeking to restructure its debt by extending bond maturities, and converting debt into shares. The company does, however, continue to face challenges related to debt extensions and late payments on bond principals and interest.
Notably, in 2024, legal hurdles that brought several projects to a standstill before have started to clear, allowing for the resumption of some of Novaland’s projects.
Given the aforementioned challenges and uncertainties, buying Novaland shares at this time should be considered carefully. The company’s financial health, operational performance, and overall real estate market conditions pose significant risks.
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Disclosure: The author does not have any financial interest in Novaland stock.