IDC Update – OUTPERFORM

IDICO CORPORATION – JSC (IDC VN)

Positive 1H2024 result. Adjust 2024 forecast. Roll forward target price to VND66,600 at YE2025, up by 3% compared to 2024 target price. Upgrade recommendation from Neutral to Outperform as stock price decreased by 7% from our last update report in 16 May, 2024.

IDICO posted positive 1H2024 result with revenue of VND4,616 bn (+30% YoY) and PBT of VND1,737 bn (+67% YoY), completing 69% of 2024 profit target and 66% of our forecast. Strong growth mainly came from the Industrial park (IP) and residential property segments.

IP segment: In 1H2024, revenue from IPs increased by 39% YoY, to VND2,127 bn as around 65ha was delivered in 1H2024. Segmented gross margin grew by 10.4 pp YoY, to 64.3% thanks to a 10.7% YoY increase in average leasing price to USD135/sqm/remaining term. IDC leased 43.3ha (-44% YoY) in 1H2024, equivalent to 30% of its target and 29% of our forecast. We adjust delivered area in 2024 by 14%, to 105ha, IP revenue down by 12%, to VND3,429 bn and 2024 leasing area by 27% to 109ha.

The new IP Tan Phuoc 1 in Tien Giang was approved in June, 2024 with a total area of 470ha, NLA of 363ha and total investment of VND5,937 bn. We expect this IP will start leasing from the end of 2025 and record revenue from 2026.

Residential property segment: In 1H2024, revenue from residential property segment jumped by 6.8x YoY, to VND369 bn mainly thanks to the handover of 1.45ha of commercial land to Aeon with revenue of VND268 bn and some land lots in Bac Chau Giang project with revenue of VND70bn. The revenue recognition of Bac Chau Giang was beyond our expectation, thus we increase estimated 2024 residential property revenue by 40% to VND754bn. 

Power segment: Power revenue increased by 10% YoY, to VND1,468 bn in 1H2024 mainly thanks to an 11% growth in volume distributed in IPs, to 737mn kwh. Segmented gross margin dropped by 4.6 pp, to 4.8% due to lower contribution from two hydropower plants Dak Mi 3 and Shrok Phu Mieng which were affected by drought and water shortage. We keep our forecast for the power segment unchanged with estimated revenue of VND3,122 bn (+7% YoY) and segmented gross margin at 7.3% (-5 pp YoY).

Overall, 2024 total revenue was adjusted down by 3% to VND8,239 bn (+14% YoY) mainly because we adjust IP revenue down by 12%, to VND3,429 bn. Meanwhile, PBT was adjusted up by 7% to VND2,819 bn (+37% YoY) mainly thanks to lower SG&A expenses (revised down by 21% to VND371 bn). Using the NAV method, we suggest a target price of VND66,600/share at YE2025, 3% higher than our 2024 target price. Change our rating from Neutral to Outperform as stock price declined by 7% from our last update report in 16 May, 2024.