BCM – Take a big leap during FY22-23F – Initiation

• BCM and its associates own more than c.15,000 ha of land bank across Vietnam, which could sustain at least 10 years of development.
• We expect FY22-23F NP to surge 66.2% yoy/63.2% yoy, driven by revenue from residential land transfer and new IPs Cay Truong and VSIP 3.
• Initiate coverage with an Add rating and SOTP-based TP of VND99,000.

Largest industrial land bank spanning across Vietnam

BCM is the largest listed IP company in Southern Vietnam in terms of industrial land bank with 7 IPs spanning over c.5,000ha, accounting for c.35-40% of Binh Duong’s total industrial land bank. BCM together with its associates now own more than c.15,000ha of land bank in Vietnam, accounting for c.25% of Vietnam’s industrial land put into operation as of end-2021.

BCM is likely to deliver strong industrial land lease growth in FY22-23F…

We expect BCM to deliver strong industrial land area growth in FY22/23F of 109ha (+18.7% yoy)/119ha (+9.2% yoy), fueled by new contribution of the Cay Truong IP starting in FY23F and 70ha p.a from the Bau Bang expansion IP. Together with average rental growth of 10-20% yoy p.a given growing industrial demand, we forecast FY22-23F IP revenue to VND3,258bn (+24.7% yoy) and VND3,708bn (+13.8% yoy), respectively.

…together with residential revenue to skyrocket in FY23F…

We estimate BCM to record FY22F residential revenue of VND2,925bn (-0.4% yoy), mostly from Uni Galaxy and social housing project handovers. We expect BCM to record the c.VND5,000bn payment of 18.9ha land transfer from Binh Duong New City project for CapitaLand in FY23F. Together with existing projects, FY23F residential revenue is likely to surge by 111.6% yoy to VND6,190bn.

….and double-digit associates income growth to boost FY22-23F NP surge

We forecast FY22-23F BCM’s associates income to grow at 2.9% yoy/36.4% yoy on FY21-22 low base and stable growth from VSIP, BW and IJC. We estimate BCM’s FY22-23F NP to VND2,334bn (+66.2% yoy) and VND3,809bn (+63.2% yoy), respectively.

Initiate with Add and SOTP-based TP of VND99,000

Our Add recommendation was underpinned by (1) 66.2% yoy/63.2% yoy surge in FY22-23F net profit (NP); (2) attractive valuation with a 30% upside. Upside catalysts: 1) faster IP or residential land sales, 2) sooner-than-expected new IPs launches. Downside risks: 1) lower-than-expected IP land sales, 2) delays in obtaining permits for new launches and 3) higher-than-expect leverage which could take a big chunk out of profits.

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