CTD Update

COTECCONS CONSTRUCTION JSC (CTD VN)

CTD delivered strong FY2026 results, with revenue reaching VND34.34tn (+38% YoY) and net profit at VND788bn (+73% YoY), supported by construction growth and a gain from the divestment of the Emerald 68 project.

With backlog expanding to nearly VND70tn (+98% YoY), equivalent to approximately two years of revenue, we expect strong earnings visibility into FY2027. We forecast FY2027 revenue of VND42,15tn (+23% YoY) and net profit of VND904bn (+15% YoY).

We remain cautious as elevated interest rates could delay project execution and payments by property developers, extending the receivables collection cycle. Accordingly, we cut our end-FY2027 target price by 15% to VND87,500/share, reflecting a higher discount rate and longer assumed collection period. We maintain our BUY recommendation, as the share price has declined 20% since our previous report, while the growth outlook remains supported by the sizable backlog and increasing exposure to infrastructure construction, broadening growth opportunities and reducing reliance on residential construction.

 Backlog Diversification to Reduce Residential Exposure. CTD is diversifying its order book, with infrastructure emerging as a new growth driver. In FY2026, new contract awards reached VND60.3tn (1.8x FY2025 revenue), lifting backlog to VND70.0tn (+98% YoY). Infrastructure accounted for 33% of new awards and 16% of backlog, including major projects such as Can Gio Bridge, Gia Binh Airport, Long Thanh International Airport and Phu Quoc Airport expansion. However, residential construction still represented 72% of FY2026 revenue and backlog, leaving CTD materially exposed to the real estate cycle.

Gross Margin Improvement Strategy. Over the next 2–3 years, CTD aims to improve gross margins through material cost optimization, leveraging its large backlog to strengthen purchasing power, negotiate better prices and lock in material costs. M&A in MEP and aluminum-glass could further enhance operating efficiency. However, we remain cautious, forecasting FY2027 gross margin at 3.4–3.5%, versus 4.2% in FY2026, as residential construction remains sensitive to elevated interest rates and volatile material costs.

Elevated Interest Rate Risk. Elevated interest rates could pressure developers’ cash flows, increasing the risk of slower receivables collection and higher working-capital requirements, particularly as CTD’s net debt/equity rose from 3.1% in FY2025 to 20.8% in FY2026.