Flash note KDH – BUY

KDH reported strong growth in 2025 business results which were higher than our projection mainly thanks to a higher-than-expected number of low-rise units delivered at the Gladia project. We adjust our 2026 NPAT forecast upwards by 13% to VND2,013 bn given an increase in the gross profit margin of the Gladia project and a reduction in payment discounts for homebuyers. We reduce our end-of-2026 target price for KDH by 15% to VND33,400/share due to a 5-10% decrease in the absorption rates of new projects amidst rising interest rates and tighter credit controls for the real estate sector. We upgrade our rating from Outperform to Buy as the share price has fallen 24% since our last report on November 3, 2025.

KDH recorded positive business results in 2025 with net revenue reaching VND4,674 bn (+43% YoY) and NPAT reaching VND1,634 bn (+103% YoY), exceeding the profit plan by 63% and ACBS’s forecast by 60%, mainly thanks to a higher-than-expected number of low-rise units delivered at the Gladia project.

The low-rise component of the Gladia project has achieved a fairly good absorption rate since its launch in September 2025, with an estimated 130 out of 226 units sold and 70 units handed over by the end of 2025. The high-rise component which comprises of 616 apartments commenced construction in January 2026, with launch expected in 3Q2026 and handover from 4Q2027.

KDH expects to achieve NPAT of over VND2,000 bn in 2026, of which VND1,600 bn comes from the Gladia project and VND500 bn from inventories of other projects. In addition, the company is currently in discussions regarding joint ventures and partnerships in three projects (Binh Trung Dong Expansion, 11A, and Le Minh Xuan Industrial Park Expansion) and may record additional profits from the sale of capital in these projects.

We adjust our 2026 revenue forecast downwards by 13% to VND5,258 bn because 30 low-rise units at Gladia, projected for handover in 2026, were handed over in 2025. However, we increase our 2026 NPAT forecast by 13% to VND2,013 bn (+23% YoY) due to a 10% increase in the gross profit margin of the low-rise component of the Gladia project to nearly 70% and a 38% reduction in payment discounts for homebuyers to VND345 bn. We have not yet reflected the extraordinary profits from joint ventures and partnerships in the three aforementioned projects in our 2026 forecast due to a lack of detailed information.

Given the upward trend in interest rates and tighter controls on real estate credit, we are adjusting our absorption rate for new projects downward by 5-10%, thereby reducing our end-of-2026 target price for KDH by 15% to VND 33,400/share.

Overall, we believe KDH’s business outlook continues to be supported by the limited supply of low-rise projects in the former Ho Chi Minh City area, the acceleration of surrounding infrastructure projects (e.g., the upgrade of the My Thuy and An Phu intersections, Ring Road 3, and the expansion of the Long Thanh – Dau Giay Expressway), and the rapid growth of the middle class, driving high demand for second homes. We upgrade our rating from Outperform to Buy given a 24% drop in share price since our last report on November 3, 2025.