Earnings Report /
Vietnam

Khang Dien House Trading and Investment: Capturing the price surge in the HCMC metro area

  • Lovera Vista units delivery was the main contributor to earnings, as expected

  • Continuous delivery at Lovera Vista would lead Q4 21 results

  • We set a target price for KDH of VND56,000/share. We recommend Accumulate

Rong Viet
16 December 2021
Published byRong Viet

Lovera Vista units delivery was the main contributor to earnings

  • In 9M 21, KDH recorded revenue and NPAT-MI of VND3,148bn (-3% yoy) and VND788bn (+2% yoy), respectively, owing to the handover of Safira (234 units), Lovera Vista (1,048 units) and Verosa Park (29 units).

  • Sales activity took a hit in Q3 21 given the Covid-19 stringent lockdowns in HCMC from July to end of September. As a result, KDH only sold two units at Verosa Park.

Continuous delivery at Lovera Vista would lead Q4 2021 results

  • At the end of Q3 21, KDH delivered most of the units and sales activities at the Lovera Vista project (1,048/1,146 units) and Verosa Park (290/293 units). We expect the company will deliver the remaining units in Q4 21, reporting total revenue of VND320bn (or US$14mn) from these two projects. Therefore, Q4 21 total revenue and NPAT-MI will be about VND334bn (or US$15mn, -74% yoy) and VND118bn (or US$5mn, -69% yoy), respectively.

  • In addition, we estimate that the company will sell few units at Armena project (Thu Duc City) given that the construction resumed in October after the lockdown. KDH has nearly finished the construction of its foundation in this project.

  • We forecast that KDH will achieve revenue of VND3,481bn (or US$151mn, -23% yoy) and NPAT-MI of VND924bn (or US$40mn, -20% yoy) in 2021.

Valuation and recommendation

We believe that the key advantage of KDH are the two low-rise projects ready to launch in the East of HCMC, namely Armena and Clarita during Q4 21 and 2022, which will post 30% CAGR growth on NPAT-MI in the 2020-2023 period.

Specifically, we estimate 2022 revenue to reach VND3,913bn (or US$170mn, +12% yoy) and NPAT-MI of VND1,576bn (or US$69mn, +71%), backed by the delivery of Armena and Clarita projects, along with revenue of Le Minh Xuan (expanded) project. These two projects will help KDH improve its gross profit margin. In 2023, the recognition at the Corona City project along with remaining units at the three aforementioned projects will help the company reach revenue of VND6,764bn (or US$294mn, +73% yoy) and NPAT-MI of VND2,524bn (or US$110mn, +60% yoy).

Using the RNAV method, we set a target price for KDH of VND56,000/share. We recommend Accumulate with a total return of 16% at the closing price on 16 December 2021.