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KBC update – BUY
09/03/2023 - 1:59:48 CHKINH BAC CITY DEVELOPMENT HOLDING CORPORATION JSC (KBC VN)
Reiterate our Buy rating with a target price of VND27,310 at YE23 given ongoing diversification of production away from China and KBC’s capability in attracting key electronic manufacturers despite a slowdown in global demand and registered FDI to Vietnam.
2022 profit mainly came from revaluation of Saigon Danang Investment JSC
Kinh Bac’s 2022 net revenue dropped by 77% YoY, to VND957bn, far below its target due to:
(1) a delay in delivering 107ha with a total contracted value of VND3,540bn at Quang Chau industrial park (IP) (77ha) and Nam Son Hap Linh IP (30ha) to 2023 as tenants were not granted investment licenses in 2022,
(2) no bulk sales transaction recorded at Trang Cat urban area and
(3) sales return of VND447bn for 2.2ha at Trang Due urban area from a sub-developer given a delay in approval of Hai Phong province’s general planning.
In 2022, KBC delivered over 19ha of industrial land (-83% YoY), including over 17ha at Tan Phu Trung IP and nearly 2ha at Quang Chau IP. We estimated that average leasing rate at Tan Phu Trung IP in 2022 increased by 6.5% YoY, to c.USD144/sqm/remaining leasing term while that at Quang Chau IP jumped by 24% YoY, to c.USD134/sqm/remaining leasing term.
On the other hand, 2022 PAT doubled YoY, to nearly VND1,600bn thanks to nearly VND2,200bn from revaluation of Saigon Danang Investment JSC when KBC increased its ownership in this company from 19.5% to 48%.
Be able to pay back VND2,500bn of corporate bond due in June
In this year, KBC will have a total of VND2,900bn of corporate bonds matured, of which VND400bn due in February and VND2,500bn in June. Given cash and cash equivalent balance of nearly VND2,300bn at YE22 and around VND3,000bn collected in 1H23 from 2022 contracted value of VND3,540bn and a newly signed contract of USD90mn with Goertek for 62.7ha in Nam Son Hap Linh IP, we think that KBC can fulfil its debt obligation in Jun.
View details in full report below.
