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Bamboo Capital JSC (BCG) – Initiation report

Company Note 18/06/2021    252

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  • The handover of the Malibu Hoi An and the King Crown Village phase 1 project is expected to boost BCG’s net profit (NP) by 221% yoy to VND678bn in FY21F
  • In FY21-23F, the key growth drivers are great handovers of overlapping real estate projects and cash flow from renewable energy projects.
  • Initiate coverage with an Add rating and SOTP-based TP of VND18,300.

Market Price

Target Price

Dividend Yield

Rating

Sector

VND14,100

VND18,300

5.67%

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CONGLOMERATE

Property development becomes the main pillar in FY21-23F

After the restructuring phase in FY15-19, BCG has acquired more than 10 property projects, focusing on two segments including hospitality real estate in Da Nang, Quy Nhon, Phan Thiet, and residential property in Thu Duc city, HCMC. We recognise that BCG’s strength lies in its ability to restructure projects, solving lingering legal issues thanks to M&A and project development experience. Besides, BCG could utilise resources from its subsidiary – Tracodi (TCD VN) in building activities. We expect BCG’s NP to reach VND678bn in FY21F and VND1,772bn in FY23F on the back of recovery in property market post pandemic.

BCG pioneers and generates stable cash flow from renewable energy (RE) 

In FY19-20, BCG partly took advantage of the Government’s preferential solar power price policy and put into operation a total of 406MWp of ground solar power and 47MWp of rooftop solar power, being one of the businesses has the largest capacity in the market. The list of the most feasible projects in FY21-23F includes the remaining 114MWp of the Phu My project (commercial operation date on Jun/Jul 2021), 82MWp of rooftop and at least 180 MW of wind power in 2022. Accordingly, we forecast that BCG’s RE segment will achieve VND106bn of NP in FY21 and gradually increase to VND600-700bn in FY23-25F.

We expect NP to surge 221% yoy in FY21F

In FY21F, BCG plans to handover Malibu Hoi An, King Crown Village phase 1 and Amor Riverside Villas. We expect BCG to deliver VND3,048bn in revenue and VND686bn in NP from these projects, resulting in a 221% surge in NP yoy.

Initiate coverage with an Add rating and SOTP-based TP of VND18,300

We initiate coverage of BCG with an Add rating and SOTP-based TP of VND18,300. Re-rating catalyst is better-than-expected presales and handovers. Downside risks including the new power price policy which is more unfavorable for business and slow legal approval of construction permits in property projects.

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