Earnings in Q1 2021 grew 33% backed by the delivery of Safira and Verosa Park projects.
2021 results will be driven by the recognition of Lovera Vista.
Current valuation (P/B of 2.4x) looks relative attractive compared to peers’ mean (P/B of 2.9x); The current target price is VND33,100 – we will update our target price as we factor in the new condo project in Binh Tan District (up to 1,000 units) in our model.
Q1 results: Over 30% of earnings growth backed by the delivery of Safira and Verosa Park projects
Delivery: From our update following the AGM, the company posted revenue of VND836bn (+19% yoy) and NPAT-MI of VND205bn (+33% yoy). The handover of the remaining units at Safira and Verosa Park (c10% of total units) were the main driving forces in Q1.
2021 Outlook: Lovera Vista to lead earnings
For FY 21, KDH set a target to achieve revenue and NPAT of VND4,800bn (+4% yoy) and NPAT of VND1,200bn (+6% yoy). This result would be driven by the handover of the Lovera Vista project. By the end of 2020, KDH sold 87% of this project units. We think that KDH will be able to deliver within the planned timeline (from May 2021) as they sold all units based on our site visit in April 2021.
Sales plan: KDH expects to launch three projects including Armena, Clarita and Binh Tan apartments during Q4 21-22.
Land clearance: There has been progress on the legal work and land clearance at the two biggest projects, with total land banks of nearly 440ha. Specifically, for Tan Tao (330ha in Binh Chanh), KDH got LURs and 1/500 certificate along with finished compensating 70% of total land area. For Le Minh Xuan expanded project, they also successfully obtained LURs and 1/500 certificate.
Valuation is still attractive, brighter outlook from 2022
The story of KDH will be brighter from 2022-2023 given the price rally in Thu Duc City – the most popular area of HCMC as they may start to open sale in Armena and Clarita projects during Q4 21-22. Moreover, with villas and townhouses, KDH will be able to gain better gross margin (above 50%). From 2023, the expected launch of large projects including Corona City, Tan Tao and Le Minh Xuan Industrial Parks will be noticeable factors given the large landbanks (these project occupy more than 80% of KDH's landbanks). Mid-term projects including Corona City and Le Minh Xuan Industrial Parks will strongly benefit when Binh Chanh will become an urban district from 2021-2025, according to the HCMC’s Department of Home Affairs plan (already submitted to the municipal People’s Committee in March 2021).
In terms of valuation, KDH is still attractive given its P/B TTM of 2.44x (as of 6 May 2021), which is below the average of its peers including NVL, VHM, NLG, DXG (c2.91x). On an RNAV approach, we will update the target price by adding up the new condo project (1.8 ha with 1000 units) in 158 An Duong Vuong (Binh Tan).