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KBC – Wait to see royal poinciana blooming

• KBC has announced its Q4 2023 financial results, reporting a revenue of VND 847 bn (USD 35 mn), marking a 630% YoY NPAT-MI was nearly VND 70 bn (USD 3 mn), a significant turnaround from the adjusted loss of VND 482 bn in the corresponding period of 2022. The results fell short of expectations due to KBC's inability to deliver 33 ha of land as scheduled. For the full year of 2023, KBC achieved a revenue of VND 5,885 bn (USD 240 mn; +319% YoY), net income of VND 1,996 bn (USD 81.5 mn; +29% YoY), and EPS of VND 2,600.
• Phuc Ninh project is highly likely to resume investment and sales activities in 2024, while the Trang Cat project is expected to show positive signals for a restart in the second half of the year and commence sales in 2025. The bottleneck in land-use expenditure at the Nam Son Hap Linh IP has been resolved, laying the groundwork for accelerating sales processes in 2024 amid high demand for industrial land in the North, whereas Trang Due 3 is poised to contribute to the financial results.
• For 2024 results, KBC forecasts revenue and NPAT-MI to reach VND 8,683 bn (USD 354 mn; +54% YoY) and VND 2,453 bn (USD 100 mn; +23% YoY), respectively, with an EPS of VND 3,196. These projections are based on the scenario that (1) KBC will deliver 187 ha of industrial land, (2) restart the Phuc Ninh project after fulfilling legal land obligations, (3) and generate VND 200 bn (USD 8 mn) in revenue from approximately 216,000 m2 of operational factory floor space at an average price of $4.5/m2/ However, a significant portion of the business results are expected to be realized in the latter half of 2024. In the first half of the year, we anticipate that KBC may deliver the remaining 33 hectares. Consequently, the business performance in the first half of 2023 is projected to be lower than the same period due to the high baseline of the first half of 2023.
• Based on the Sum of the Parts (SOTP) valuation method, we have raised our target price to VND 41,800 per share upon reevaluating the revenue prospects of KBC's ready-built factories. The expected yield over the next 12 months is +0% (based on the closing price on March 1, 2024).