Equities | Vietnam | Real Estate Development

Kinh Bac City Development (KBC - HSX)

Flashnote

31 March 2025

 

Source: Company, HSC Research estimates

 

Share price performance

Source: Company, FactSet

 

Summary financials and valuation

Year end: Dec
12-23A
12-24F
12-25F
Net sales (VNDbn) 5,618 2,834 5,964
EBITDA adj. (VNDbn) 3,026 840 2,378
Pre-tax profit (VNDbn) 2,891 696 2,207
Net profit adj. (VNDbn) 2,039 480 1,459
FCF (VNDbn) 874 483 (4,508)
EPS adj. (VND) 2,656 625 1,901
DPS (VND)
-
-
-
BVPS (VND) 23,633 24,260 26,164
EBITDA adj. growth (%) 228 (72.2) 183
EPS growth adj. (%) 31.0 (76.3) 203
DPS growth (%)
-
-
-
EBITDA adj. margin (%) 53.9 29.6 39.9
Pre-tax margin (%) 51.5 24.6 37.0
Net margin adj. (%) 36.1 17.0 24.5
Div. payout ratio (%)
-
-
-
Net debt/equity (%) 18.9 17.7 38.4
ROAE (%) 11.9 2.62 7.55
Return on avg. CE (%) 11.3 2.24 6.29
EV/sales (x) 4.60 8.94 5.00
EV/EBITDA adj. (x) 8.53 30.2 12.6
P/E adj. (x) 11.3 47.9 15.7
P/B (x) 1.27 1.23 1.14
Dividend yield (%)
-
-
-

Source: Bloomberg, HSC Research estimates

 

Company description

KBC is one of Vietnam's largest industrial park developers; its IPs cover more than 5,000 ha of industrial land.

 

 

 

 

 

 

 

 

Event: Additional land use fees for Trang Cat paid

The residential Trang Cat project (585 ha, Hai Phong) today paid additional land use fees, corresponding with the additional 72 ha residential area in the revised 1/500 master plan (approved in late FY23) to Hai Phong City..

As a reminder, Trang Cat was granted the 1/500 master plan in FY10 and the investment license in FY12. Initially, Trang Cat had an expected investment capital of VND12.3tn, 124 ha of residential land. KBC accelerated land clearance in the FY11-14 period with land compensation costing approximately VND3.5tn (which is almost complete). In FY20, KBC completed the land use fee payment of VND3,7tn for Hai Phong City. As of end-4Q24, total inventory amount for Trang Cat totaled VND8.5tn. Currently, the project is conducting land leveling for 100 ha.

To capitalize on Trang Cat's development potential, KBC adjusted the 1/500 master plan (approved in FY23), increasing residential land by 72 ha to a total of 196 ha while reducing other land types. This required KBC to apply for an amended investment license, which was approved on 16 January 2025. Trang Cat now has an expected investment capital of VND69.1tn and a projected population of 90,110 people, a substantial scale in our view

The payment of additional land use fees today is the final step in these adjustments. Going forward, KBC can accelerate infrastructure construction and start selling the project in bulk. KBC expect selling 20 ha or above in bulk, at a selling price of VND28mn sqm and recognize earnings this year (potential buyers are not yet disclosed). However, in our forecasts, we expect infrastructure work and legal processes of the M&A will take time. We conservatively forecast KBC to sell in bulk of 20 ha (for the expected revenue of VND4tn, based on an assumed selling price of VND20mn sqm) and recognize earnings in FY26.

We also value the project at VND11tn, accounting for 33% of total RNAV for KBC. If KBC can sell in bulk the project in FY25 or at a higher selling prices compared to our assumed selling prices, it will be an upside risk to our forecasts.

Maintaining Buy rating and TP

We maintain our Buy rating and RNAV derived VND36,400 TP. The stock is trading at a 42% discount to RNAV vs. its 3Y average of 39%.

In FY24, KBC faced challenges as delays in legal paperwork for its land bank reduced the land available for sales and delivery, affecting both industrial and residential segments. However, FY25 has kicked off on a strong note for KBC. The company has secured investment licenses for three important projects including Trang Due 3 IP (652 ha, Hai Phong), Kim Thanh 2 Phase 1 IP (234 ha, Hai Duong), and the Trang Cat residential development (585 ha, Hai Phong). Additionally, improvements in land compensation and presales for other major industrial park projects are further bolstering its outlook. These developments collectively position KBC for a promising new phase of growth starting this year.

 

 

 

 

Financial statements and key data

Note: *Excluding short-term investments.

Source: Company, HSC Research estimates

 

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Explanation of Institutional Equity Research Ratings

 

Buy: Expected to rise by more than 20% on an absolute basis in the next 12 months

Add: Expected to rise by between 5% and 20% on an absolute basis in the next 12 months

Hold: Expected to rise or decline by less than 5% on an absolute basis in the next 12 months

Reduce: Expected to decline by between 5% and 20% on an absolute basis in the next 12 months

Sell: Expected to decline by more than 20% on an absolute basis in the next 12 months

 

 

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