KBC Update – NEUTRAL

KINH BAC CITY DEVELOPMENT HOLDING CORPORATION JSC (KBC VN)

Positive 1H2025 result mainly thanks to large industrial land delivered at Hung Yen industrial clusters. As the overall risk from the US tariff has reduced, we revise our 2025 forecast as we increased delivered area at Hung Yen IC and decreased SG&A expense-to revenue ratio. Our YE2025 target price is adjusted up by 29% to VND42,100/share as we add five new IPs in our valuation model. Change our rating from Outperform to Neutral as stock price has increased by 38% since our update report in 2/2025.

KBC reported a positive 1H2025 result with revenue of VND3,696 bn (+254% YoY) and NPAT of VND1,248 bn (+537% YoY) mainly thanks to:

• A five-time YoY growth in the industrial park (IP) segment’s revenue, to VND2,803 bn which is driven by higher delivered industrial land area of 85.7 ha mostly at Hung Yen industrial clusters (ICs) compared with 15.3 ha delivered in 1H2024.
• Effective tax rate declined from 44.0% to 24.6%

In 1H2025, KBC was approved to develop 5 new IPs (Kim Thanh 2, Que Vo 2 expansion, Song Hau 2, Binh Giang and Phu Binh) with a total area of 1,578 ha. This increases KBC’s total IP area to over 6,400 ha and remaining NLA to 2,882 ha, among the highest in the IP industry. The company started constructing Trang Due 3 IP (653 ha in Hai Phong) in 5/2025 and signed MOUs to lease around 30 ha with 4 tenants.

After nearly 4 months of negotiation, the US agreed to reduce Vietnam tariff from 46% to a much more favourable rate of 20% which is in line with most ASEAN countries and lower than China, India, Laos and Myanmar. The main concern is now a 40% tariff on transhipped goods which is aimed to prevent Chinese goods from using Vietnam as a ‘transit hub’ to export to the US while the US government has not clearly defined ‘transhipment’. However, we think the overall risk has reduced and Vietnam’s fundamental strengths (political stability, labour cost, electricity cost, number of signed FTA) are expected to continue to enhance its long-term FDI attractiveness. Thus, we revise 2025 leased area up by 90% to 141 ha, equivalent to 73% of the company’s target.

Leverage ratios increased to finance for many new projects. During 1H2025, total debts increased by nearly VND16 trn, to over VND26 trn. However, thanks to cash collected from new leases and VND4,162 bn from the private placement of 174.15 mn shares at an offering price of VND24,900/shares, net debt increased by VND4,367 bn, to VND6,055 bn. Net debt/Equity ratio rose from 8.2% to 23.6%, higher than the industry median of -19.5%. Net debt/EBITDA jumped from 2.1x to 2.9x, higher than the industry median of -1.4x.