KDH_BUY_TP 48,200_Upside 28.0_New project implementation ensures growth potential _BSC_Vietnam company update

Valuation    

• We maintain our BUY recommendation for KDH and raise our target price to VND48,200 based on RNAV method (+28% compared to the price on Aug 29, 2022) due to (1) Update of project portfolio, (2) Adjustment of project selling price assumption for potential land funds in Binh Tan, Phong Phu 2 and (3) WACC discount rate adjustment = 12% for projects due to increased interest rate and increased cost of capital

Forecasting business results

• BSC estimates that in 2022, KDH's revenue and profit after tax to reach VND 2,369 billion (-36.8% YoY) and VND 1,469 billion (+19.0% YoY) respectively. EPS FW 2022= VND 2,171, PE FW 2022 = 17.3 times, P/B FWD 2022 = 2.1 times. The main source of income comes from (1) Profit from cheap purchase of Doan Nguyen project, (2) Handing over The Classia project in Q3-Q4/2022.

Investment perspective

•  Owning a large-scale land bank (680 hectares) in the inner-city waiting to be "unlocked".
•   Deploying the project of Le Minh Xuan Industrial Park at the end of 2023.

Risk  

• The plan to open and sell projects has been delayed due to legal issues and the Covid-19 epidemic.
• General risks in the real estate industry (loan interest rates, industry cycle)

Business Update

• Profit from the re-evaluation of Doan Nguyen project after merging Phuoc Nguyen company and handing over a part of The Classia project to support the growth of business results in 6M/2022. KDH's 6M/2022 revenue and profit after tax reached VND 142.7 billion (-83% YoY) and VND 299.5 billion (+26% YoY) respectively.
• New sales in the period of 2022-2023 will be guaranteed on by new projects. BSC estimates that the total pre-sales value of KDH in 2022 and 2023 is estimated at about VND 4,935 billion and VND 8,809 billion (+64% YoY) respectively.