BCM Update – OUTPERFORM

INVESTMENT AND INDUSTRIAL DEVELOPMENT CORPORATION (HSX: BCM)

A decline in 4Q2024 NPAT but a flat 2024 NPAT were in line with our forecast. We adjust 2025 NPATMI up by 18% to VND3.2 trn (+50% YoY) given adding a transfer of a land lot at Binh Duong New City. Increase YE2025 target price by 23% to VND92,000/share mainly thanks to the increase in industrial land leasing rates and residential land prices in Binh Duong province. Reiterate our Outperform rating.

BCM announced a decline in 4Q2024 result with revenue of VND2,013 bn (-61% YoY) and NPAT of VND1,540 bn (-25% YoY). The decline was mainly due to a significant transaction of transferring an 18.9ha land lot to CapitaLand with a value of USD242 mn in 4Q2023. 

For 2024, BCM recorded revenue of VND5,225 bn (-36% YoY) and NPAT of VND2,310 bn (+1% YoY), completing 98% of profit target and 94% of our forecast. The decline was mainly due to the land lot transfer transaction in 4Q2023 mentioned above which partly offset by higher profit shared from associates and JVs, especially from VSIP, rising by 145% YoY, to nearly VND2 trn. 

BCM’s leverage ratios continued on an upward trend with Net debt/Equity ratio rising from 75.9% in 2020 to 103.1% in 2024 (+9.2% YoY) and Net debt/EBITDA from 6.1x to 11.0x. Total debts increased by over VND8.7 trn, to VND23.6 trn in 2024, of which short-term bank loans accounted for 28%, long-term bank loans 23% and corporate bonds 56%. 

To reduce leverage ratios, the company plans to issue 300mn shares (equivalent to 29% of current outstanding shares) via a public auction held on 28/4/2025 with the starting price of VND69,600/share. The expected proceed of VND20.88 trn from this issuance will be used to invest in Bau Bang expansion and Cay Truong industrial parks (IPs), contribute capital to associates, restructure debts and invest in working capital (Please see Table 5). Given the starting price 12% lower than the current market price, we think the likelihood to sell the entire 300mn shares may be challenging.

 We forecast a strong growth in 2025 with revenue of VND10.3 trn (+99% YoY) and NPATMI of VND3.2 trn (+50% YoY) up by 18% compared to the previous update report given adding a land lot transfer transaction to Sembcorp at Binh Duong New City. We increase YE2025 target price by 23% to VND92,000/share mainly thanks to the increase in IP leasing rates from USD120-130/sqm to USD150-170 USD/sqm and residential land prices in Binh Duong province by 30-39%.