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SIP - Leverage from large-scale land bank and growing cash flow

We have made an initial valuation for SIP stock. In our conservative view, the current share price does not fully reflect the long-term growth prospects and business position. We estimate the fair value at VND 79,300, equivalent to a projected P/B of 3.5x in 2026.
• Leverage from Large-Scale Industrial Park Land in Southern Vietnam
o SIP is currently managing five large-scale industrial parks in Southern Vietnam, covering a total area of 3,500 hectares. These parks are located in: 1) Primary markets (Ho Chi Minh City, Dong Nai), and 2) Tay Ninh, a region with potential for development due to its connection to the southern economic zone and Cambodia.
o We expect leasing area to recover to an average of 75 hectares per year during the 2026-2029 period (similar to the 2019-2021 period), with a significant contribution from Phuoc Dong Industrial Park. As a result, rental income is projected to achieve a compound annual growth rate (CAGR) of 16% from 2025-2029.
o Stable cash flow from providing utilities such as electricity and water to customers within the industrial parks. Additionally, investment in rooftop solar power systems will attract clients seeking to reduce carbon emissions in their production lines.
• Advantages from Cash Flow Growth and Healthy Financial Health:
o The company's cash flow will significantly improve from land leasing (with completed infrastructure) and providing utilities such as electricity and water to customers. For 2028 onward, free cash flow to equity holders (FCFE) will stabilize at approximately VND 4,000 billion per year, delivering a return of about 70% relative to equity capital.
o The company maintains a relatively healthy balance sheet, with around 50% of current assets in the form of deposits, providing favorable conditions for project development without the need for heavy financial leverage).
Risks
• The project's progress is slower than initially expected, which could potentially affect the company's business outcomes during the forecast period.
• SIP's primary customers are foreign direct investment (FDI) enterprises, meaning that macroeconomic factors influencing their land leasing decisions will also have an impact on the company's cash flow prospects.