X-Alpha | KDH 18,400 +21.5%: Core business to bottom out in 2026

VALUATION VIEW           

KDH has undergone a deep correction, falling 55% over the past 12 months as foreign investors net sold 70.8 million shares (equivalent to 6.3% of KDH's shares outstanding), taking both the share price and valuation to five-year lows. We believe that, beyond the broader trend of foreign net selling across the market, KDH's weak performance over the past 12 months also reflects the challenges facing the real estate sector, where a high interest rate environment is weighing on project absorption, together with cash flow pressure from the BT project and pipeline projects.

BSC maintains its BUY rating on KDH but lowers its target price by 54.1% from the previous level to VND18,400/share (upside of +21.5%) mainly because we now apply a 40% discount to the valuation, reflecting risks related to capital requirements and the ability to “unlock” the Tan Tao and Phong Phu 2 mega-projects over 2026-2030. Although market sentiment has yet to improve, we believe the company's difficulties are already priced in, as KDH currently trades at a 2026F P/B of 0.89x, below the -2 standard deviation level of 1.06x.

EARNINGS FORECAST

In 1H2026, extraordinary income was the main driver of KDH's net profit growth. We expect the core business, led by handovers at Gladia by The Water, to be the main contributor to earnings in 2H2026-2027. Specifically:

2026: Net revenue of VND1,664bn (-64% YoY) driven mainly by handovers of low-rise products at Gladia (held through subsidiary Doan Nguyen) and backlog from past projects not yet fully handed over. However, NPATMI is forecast to rise 41% YoY to VND1,484bn, thanks to extraordinary income from the gain on divesting a 2% stake in Binh Trung Moi and a bargain purchase gain on the acquisition of An Lap. Excluding these extraordinary items, 2026 net profit is forecast at VND302bn (-71% YoY).

2027: Continued handovers at Gladia by The Water and new handovers at Gladia Heights will drive earnings. BSC forecasts net revenue of VND5,209bn (+213% YoY), but NPATMI to fall 53% YoY to VND690bn on the high 2026 base created by extraordinary income. Excluding extraordinary items, 2027 net profit is expected to grow 128% YoY.

RISKS: Pressure from interest payments and capital expenditure on the BT project. Borrowings at end-1H2026 jumped to VND16,659bn (+64% vs. end-2025) as KDH consolidated An Lap Real Estate Development JSC. However, we expect the cash flow pressure to also push KDH to accelerate project-level cooperation with other major partner