Company Quarterly Earnings Update – KBC VN – 2019 Q2

Summary of the H1/2019 results of Kinh Bac City (KBC VN) 

H1/2019 result highlights
  • KBC’s net revenue rose strongly by 56.4% yoy to VND 1,570bn in H1/2019, mainly thanks to good selling progress of its industrial park (IP) development business; but there were no sales from the residential development business.
  • KBC has delivered a total of 62.7 hectares of IP land, up by 22% yoy. Thanks to the recent strong IP land demand, IP land prices have risen strongly in Vietnam. KBC’s existing IP land prices were 20-30% higher than in the same period of last year.
  • KBC’s gross margin improved to 55.3% from 54.0% in same period of last year, mainly thanks to higher IP land prices that more than compensated the negative impact from the change of the product mix. Net profit after tax climbed by 75.7% yoy to VND 511bn, while net profit after minority interest increased by 44.5% yoy to VND 389bn.
  • KBC’s IP business is likely to benefit from the expected continued solid foreign-direct-investment (FDI) inflows into Vietnam in coming years. The trade dispute between the US and China has recently accelerated such inflows. FDI companies, which have factories in China, are now trying to expand or even to shift production facilities outside China to diversify the risk from the trade tensions between the world’s two largest economies.
  • Thanks to higher selling IP land prices, we revise up our projection for KBC’s bottom line by 12.1% for 2019 and by 4.3% for 2020. In particular, net profit should amount to VND 1,186bn (up by 58.6% yoy) in 2019, and to VND 1,251bn (up by 5.5% yoy) in 2020.

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