Cập nhật KDH – MUA

KHANG DIEN HOUSE TRADING AND INVESTMENT JSC (KDH VN)

Increase target price by 45% to VND62,870 and upgrade to Buy thanks to revaluation of projects in Binh Tan and Binh Chanh districts of Ho Chi Minh City

Business result

KDH posted unaudited 2021 net revenue of VND3,738bn (-18% YoY) and PAT of VND1,204bn (+4% YoY), equivalent to 77% and 98% of our forecast. The underperforming top line was mainly due to a delay in the launch of Classia project (previously known as Armena), while the bottom line was similar to our projection thanks to nearly VND200bn of revaluation surplus from acquiring Nguyen Thu JSC, which owns a project in Phu Huu Ward, Thu Duc City at the cost of VND420bn. Near the end of 2021, KDH announced its plan to buy 60% of Doan Nguyen Ltd. at the max cost of VND620bn to acquire an over 6ha residential project at Binh Trung Dong and Cat Lai Wards, Thu Duc City. 

Given the impacts of the 4th wave of the COVID, KDH just sold 28 units (-94% YoY) at Verosa Park and Lovera Vista in 2021. Thus, advance from customers dropped by over VND2,000bn, to VND157bn at YE2021. 

Fund raising

In 2Q2022, KDH will issue VND2,000bn of 36-month non-convertible, unsecured and no-warrant corporate bonds to the public with a fixed coupon rate of 9-10%, of which VND1,600bn will be used for land clearance at Tan Tao urban area and construction and development of the condominium project in Binh Tan district and VND400bn for construction and development of the Classia project. We expect Net debt/Equity ratio increased from 10.9% at YE2021 to 16.9% at YE2022.

Forecast

In 2022, the company is expected to launch three new projects, i.e. Classia in Thu Duc City (4.3ha with 180 low-rise units), Clarita in Thu Duc City (5.8ha with 159 low-rise units) and a condominium project in Binh Tan district (1.8ha with ~1,000 units). Given low supply, infrastructure development and the potential of the Thu Duc City, we expect high absorption rates of these projects with estimated 2022 sales value of over VND6,400bn.

We expect a 5% YoY growth in 2022 net revenue, to VND3,926bn and a 9% YoY growth in PAT, to VND1,316bn mainly thanks to delivery of Classia and Clarita projects. 

Le Minh Xuan expansion IP is expected to start building infrastructure and waste & water treatment plants from 3Q2022 and start leasing from 2023 with expected land leasing rate of USD260/sqm. KDH is finishing legal paper for Corona City and expects to launch in 2023. These two projects will be key growth drivers for the next year.

Valuation

With a total area of 330ha, Tan Tao urban area is KDH’s biggest project and one of the biggest urban areas in the west of HCMC. It is adjacent to current residential area of Binh Tan and Binh Chanh districts and near many key facilities such as Aeon Mall Binh Tan and City Children’s Hospital. Given an increase of clearance area by 80ha to 270ha and a 40% of average market price to VND7mn/sqm, our valuation for this project doubled to VND18,900bn.

Regarding Corona City and Phong Phu 2 projects, we increased selling prices and absorption rate to reflect the growing market price and higher demand when Binh Chanh rural district was proposed to upgrade to urban district or city by 2025.

Overall, KDH has a clear project legal status, good product design, on-time delivery and healthy financial status. It is expected to benefit from the development of the Thu Duc city, proposal to upgrade Binh Chanh rural district to urban district or city by 2025 and low supply of industrial land in HCMC. Using the RNAV method, we suggest a target price of VND62,870 at YE22, up by 45% compared to our previous target price mainly thanks to the revaluation of some projects in Binh Tan and Binh Chanh districts, especially Tan Tao urban area. Upgrade to Buy.

View details in the attachment below.