KBC - Leases Remain Stable
Our view on KBC’s core business remains positive, but not so strong about leasing demand. KBC possesses an ample land bank, coupled with premium locations in the north of the country. The two industrial parks, Quang Chau and Tan Phu Trung, with the remaining 230 hectares of commercial land will ensure stable cash inflow in the short and medium term. The driving force for growth will come from the prospect of 300 hectares of land bank in Nam Son Hap Linh (Bac Ninh) probably exploited from 2020 onwards. There is a global mobile manufacturing company signing MOU land lease contract of 60 ha with KBC. Regarding legal procedures of the Nam Son Hap Linh, KBC expects to have the paper done in 2020 and could welcome its very first tenants from around the second half.
Assuming that the coronavirus is under control by June 2020, we believe that leasing activities may come back in 2H 2020. However, we maintain a conservative view, because: 1) Coronavirus 2) Leasing demand is also affected by weaker global demand.
Our current target price is VND 14,200 per share under our RNAV calculation. We have an ACCUMULATE rating for now. Our fair value suggests a 17% upside potential and a forward FY2020 P/E of 8.1x, based on the closing price on April 07, 2020.
Kinh Bac City Development Share Holding Corporation is a Vietnam-based company engaged in the real estate industry. The Company develops and operates industrial zones, residential areas, urban areas, as well as commercial and residential buildings. It is also involved in the provision of water and electricity supply services for industrial zones, along with engineering, architectural, interior decorating and maintenance services of real properties. Other activities include infrastructure construction and the offering of tourism services, hotel and restaurant services. The Company has six subsidiaries.
Viet Dragon Securities belongs to top 20 biggest securities companies in terms of chartered capital in Vietnam. With a qualified, dedicated and professional team, a widespread network, advanced technology, diversified products and services, and good relationship with local and foreign institutions, we provide a wide range of services and products to our clients both individuals and institutions, both local and foreign. We commit to provide our clients with promising investment opportunities and a comprehensive and professional financial investment services.
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