KBC – The 1st 2022 Extraordinary General Meeting update – Flash note

• KBC has received approval for ground filling at Trang Cat urban area project and expects to complete its first bulk sales of 50ha net saleable area, valued at VND10,000-12,000bn in 2022F, according to KBC’s management.
• KBC is now completing legal procedures for 5 industrial clusters in Hung Yen (375ha) and expects to receive investment approval in end-2021.

KBC plans to hold the 1st Extraordinary General Meeting in early-2022

• According to KBC’s management, the meeting content is to consult Shareholders on a number of issues under the authority of the General Meeting of Shareholders, including the plan for bulk sales of 50ha net saleable area per year at Trang Cat urban area project.

• The management shared that KBC has received approval for ground filling at Trang Cat urban area project. The company is now completing the negotiation for its first bulk sales of 50ha net saleable area (equivalent to c.100ha of total land area, according to our estimates), valued at VND10,000-12,000bn. KBC expects to be able to close deal and hand over land in 2022F.

• The bulk sales progress at Trang Cat urban area is faster-than- expected, we expected the negotiation and legal procedures to be completed in 2H22F in the previous report, the company could receive the payment and book profits from FY23F. We are currently reviewing our valuation and FY22-23 forecasts.

• In addition, KBC is now completing legal procedures for 5 industrial clusters in Hung Yen with a total area of 375ha, of which 3 industrial clusters (225ha) namely Dang Le, Kim Dong and Chinh Nghia have just been added to the province’s master planning on industrial cluster development. The company expects to receive investment approval in end-2021, KBC is dealing with some potential customers for lease in these industrial clusters.

Robust FY22F earnings growth thanks to Trang Cat urban area project

In previous update, we forecast FY22F KBC’s revenue and net profit to reach at VND6,671bn (+35.9% yoy) and VND1,723bn (+44.1% yoy), respectively, mostly from three key IPs namely Nam Son Hap Linh, Tan Phu Trung, Quang Chau and Phuc Ninh urban area project; and have not yet reflected the contribution of Trang Cat urban area project in FY22F forecasts. We have not reflected industrial clusters in Hung Yen in our previous valuation and forecast yet. Therefore, we see potential upside in our target price and FY22-23F forecasts, although more detailed assessments are needed.

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