SIP Flash note – BUY

SIP posted positive 3Q2024 result with revenue of VND1,977bn (+16% YoY) and NPAT of VND314bn (+54% YoY). In 9M2024, the company recorded impressive growth with revenue of VND5,738 bn (+20% YoY) and NPAT of VND902 bn (+36% YoY), completing 106% and 114% of its targets and 73% and 79% of our forecast, respectively. Growth in 3Q2024 and 9M2024 mainly came from power & water supply segment and financial income.

Power & water supply segment: In 9M2024, this segment posted revenue of VND4,783 bn (+20% YoY), accounting for 83% of total revenue. Growth mainly came from higher power volume distributed in industrial parks (IPs). Segmented gross margin was 8.1%, unchanged YoY.

IP land leasing segment: In 9M2024, revenue from IP land leasing slightly increased by 4% YoY, to VND281 bn, accounting for 5% of total revenue. Segmented gross margin increased strongly from 57.5% to 68.4% thanks to higher leasing rate. SIP leased 55 ha at Phuoc Dong IP in 3Q2024, much higher than 0ha in 1Q2024 and 19ha in 2Q2024. Accumulatively, it leased 74ha in 9M2024, of which 58ha at Phuoc Dong IP was mainly for an UK textile and garment company and 16ha at Loc An Binh Son IP for SEA Logistics Partners. Thus, the company far exceeded its full-year leasing target of 47ha and our forecast of 35ha. By the end of 3Q2024, SIP’s remaining NLA was 960 ha, of which 80% has completed land clearance process.

In 9M2024, financial income jumped by 31% YoY, to VND392 bn, of which profit from disposal of investment (i.e. selling VRG, GVR and CSM shares) was VND140bn (+40% YoY) which was higher than our projection. 

In 9M2024, SIP’s total debts increased by nearly VND2 trn, to VND3,674 bn mainly because the company had a new loan balance of VND1,163 bn from Vietcombank to finance for the clearance and compensation of Phuoc Dong Boi Loi – Phase 3. Thus, Net cash/Equity ratio reduced from 56.7% to 24.4% in 9M2024.

Quick comment: We keep estimated 2024 revenue unchanged at VND7,789 bn (+17% YoY) but revise NPAT up by 5% to VND1,193 bn (+19% YoY) as we increase estimated financial income by 21%. We suggest a target price of VND95,800/share at YE2025, up by 12% compared to YE2024 target price as we roll forward valuation to 2025 and accelerate leasing progress at Phuoc Dong IP.