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KBC – Expect the industrial park segment to see a breakthrough thanks to large deal-size contracts

• Excluding the revenue deduction (448 billion VND), total revenue of KBC's core businesses in 4Q2022 reached VND 115 billion, down 90% YoY. NPAT attributable to shareholders lost VND 482 billion compared to VND 211 billion of 4Q2021. In 2022, KBC recorded total revenue of VND 958 billion (-77% YoY), and NPAT-MI of VND 1,552 billion (+98%). Profit was mainly driven by additional profit (VND 2.2 trillion) from the re-evaluation of the investment in Saigon-Da Nang Investment JSC after raising its ownership to 48%.
• Based on the total leased area (official contractsl + MOUs) YTD, we see that KBC's business results in 2023 will be a breakthrough compared to 2022 (after excluding benefits from revaluation of assets. produce). In this positive scenario, revenue and EAT-CTM are estimated at VND 6,383 billion and VND 2,570 billion, respectively (EPS is VND 3,348/share, respectively). In addition, cash flow from operating activities is also a solid fulcrum for the financial plan when KBC faces pressure to pay bonds due in 2023.
• The time for approving the general planning of Hai Phong City is expected to be in September 2023. The approved planning will be the key to unlocking the bottleneck of KBC's real estate projects in Hai Phong including Trang Due IP, Trang Due Urban project, and Trang Cat Urban project. Besides, although the available GFA is limited, however, the projects including Tan Tap IP, Loc Giang IP, Phuoc Vinh Dong industrial clusters in Long An, and industrial clusters in Hung Yen are being accelerated the site clearance and constructed with aim to put into operation in the period 2024 - 2025, this will ensure KBC land bank to conduct business in the long term.
• Based on the sum of the parts methodology (SOTP), we keep our target price unchanged at VND 25,000/share compared to the previous valuation. Combined with the expected dividend payment of VND2,000/share as it was approved by the General Meeting of Shareholders at the EGM in 2022, the total expected return in the next twelve months will be +19, 8% (based on closing price of 20/03/2023).