KDH – Expanding the land bank in Ho Chi Minh city
- In 4Q23, KDH recorded revenue of VND 470bn (USD 19.2mn, -24%QoQ, -62%YoY), due to the handover of high-value townhouse at the Classia project (~25 units as estimated). The parent company's profit after tax (NPAT-MI) reached VND 62bn (USD 2.5mn, -48% YoY), lower-than-expected due to payment discounts for buyers. For the whole year of 2023, the NPATMI reached VND 717bn (USD 29.3mn, -35% YoY), equivalent to ~72% of the company's business plan, and 2023EPS reached VND831.
- In terms of assets, notably the company's inventory balance increased to VND18.7 tn (compared to VND17tn in the third quarter), especially from Phong Phu 2 residential area (Low-rise project in Binh Chanh, with a deployment area of ~40ha). The investment acceleration in the Phong Phu 2 residential project shows that the company maintains its strategy of expanding its land fund in Ho Chi Minh City, which is an appropriate strategy when the tier-I market shows signs of recovery relatively early compared to other markets.
- In term of revenue, we maintain the 2024 expected revenue of VND 4,700bn (USD 196mn, +125%YoY), mainly from the handover of the Privia project in 2H24. The NPAT-MI could reach VND 981bn (USD 40bn, +37% YoY) and NPM at 21% because high-rise units have lower margin than low-rise unis. 2024EPS could reach 1,137.
- In 2024, the company focuses on completing the legal process of potential projects in HCMC, so that it can deploy construction and sales process in the period 2025-2026 (when the real estate market completely recovers). Notably, KDH has potential projects in the Binh Chanh area, include: 1/Solina urban area project (16.5ha) is expected to be complete land use fee payment in 2024; 2/ Phong Phu 02 residential area (~40ha) has cleared ~90% of the area, and expected to complete site clearance and pay land use fees in 2024.
- Using the SOTP (Sum-of-the-parts) method, we increase the target price at VND 40,300 per share (Upside +12% from the closing price on March 05, 2024), which is equivalent to an ACCUMULATE recommendation for long-term investment purpose.
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