KBC Update – OUTPERFORM

1Q2026 business results witnessed a sharp decline due to low industrial park (IP) land handovers. However, we maintain our 2026 full-year forecast, expecting the Que Vo Expansion 2 and Trang Due 3 projects to start handovers and revenue recognition in the coming quarters. We lowered our YE 2026 target price by 8% to VND36,800/share given a nearly VND3,000 bn increase in net debt and revised our recommendation from Buy to Outperform.

KBC reported a sharp YoY decline in 1Q2026 business results, with revenue reaching VND1,336 bn (-56% YoY) and PAT of VND234 bn (-72% YoY), primarily due to the contraction in the IP segment.

The IP segment recorded revenue of VND732 bn, down 71% YoY, accounting for 55% of total 1Q2026 revenue. During the period, KBC handed over more than 16 ha, mainly at the Nam Son Hap Linh IP—significantly lower than the nearly 80 ha in 1Q2025 from three industrial clusters (IC) in Hung Yen province. However, the gross profit margin (GPM) for this segment rose from 42% to 67% as the GPM at Nam Son Hap Linh IP is higher than that of the three ICs in Hung Yen.

The real estate segment accounted for 32% of total 1Q2026 revenue, equivalent to VND429 bn (+4% YoY), coming from the handover of 573 social housing units at the Trang Due project. The GPM for this segment remained flat at 16%.

Leverage ratios continued to rise due to heavy investment in new projects. In 1Q2026, total debts increased by VND1,545 bn to over VND30,000 bn, and net debt rose by nearly VND3,000 bn to almost VND15,800 bn. Consequently, the Net Debt/Equity ratio increased from 48% to 58.6%, and Net Debt/EBITDA rose from 4.9x to 7.6x, both higher than the industry medians of -31.3% and -2.1x, respectively.

In 1Q2026, KBC received investment approval for two new projects: Tan Dan IP and Phuong Mao 2 social housing. Specifically, in February 2026, KBC’s subsidiary—Hung Yen Investment and Development Group JSC—was granted approval in principle (AIP) of the Tan Dan IP project in Hung Yen province, covering nearly 200 ha with a total investment of VND2,271 bn. The developer expects to construct this IP from 3Q2026 and start attracting investment from 4Q2029. The Phuong Mao 2 social housing project was also approved in February 2026, covering 1.7 ha in Bac Ninh, comprising three towers with over 1,000 apartments.

We believe that difficulties in the early months of the year, such as rising material prices and conflicts in the Middle East, are only temporary. The global situation is expected to stabilize, and Vietnam will maintain its competitive advantage in attracting FDI.