BCM Initiation report – OUTPERFORM

INVESTMENT AND INDUSTRIAL DEVELOPMENT – CORPORATION (BCM VN)

The biggest property developer in Binh Duong

Becamex IDC has remaining industrial NLA of 942ha and residential NSA of nearly 1,000ha in Binh Duong province. It is the biggest industrial property developer in Binh Duong with over 30% provincial market share and the third biggest developer in Vietnam with 3.6% national market share. If adding its associates which established 18 industrial parks (IPs) covering a total area of over 11,400ha, BCM will be the biggest IP developer in Vietnam with 12.4% national market share.

Growth rate of newly registered FDI in Binh Duong shows signs of slowing down in recent years, but future outlook remains stable 

Newly registered FDI in Binh Duong shows signs of slowing down after the peak in 2015.  However, in the long-term, we think the industrial property segment still has resilient and sustainable outlook thanks to China+1 trend and FTAs signed with strategic partners in recent years. Given limited industrial land bank and stable demand from foreign corporations, we expect a slight increase in average leasing rates and stable occupancy rates in the coming years.

The transfer of 18.9ha to CapitaLand will support 2023 business result

The 1H2023 was unpleasant given difficulties in the residential property market, but we expect a double digit growth for the whole year with estimated revenue of VND9,068bn (+39% YoY) and PAT at VND2,187bn (+28% YoY). This forecast is based on the transferring of 18.9ha of residential area in Binh Duong New City (BDNC) to CapitaLand with a contracted value of USD242mn and estimated gross profit of around VND2,400bn. We expect that the company will continue to sell land lots in BDNC to sub-developers and net profit will sustain with CAGR of 8% in 2023-2025 period.

Rating and valuation 

We give an OUTPERFORM rating for BCM with a reasonable price of VND78,813/share, using the RNAV method. This price is 15.1% above the market price and equivalent to 2023 P/E of 40.3x and P/B of 4.3x. 

View details in full report below.