KDH – Start FY21F positively – Earnings Update

• KDH’s 1Q21 net profit (NP) grew 32.8% yoy to VND205bn, in line at 16.3% with our full-year estimate.
• FY21F strong presales in sight with three new launches namely Clarita (5.7ha), Armena (4.3ha), and an apartment project (1.8ha).
• We maintain our forecast for KDH’s NP of VND1,261bn in FY21F

1Q21 earnings in line at 16.3% with our full-year estimate

• KDH’s 1Q21 revenue increased 19.3% yoy to VND836bn, mainly from the delivery of Safira (219 units of condo) and Verosa Park (16 units of villa).
• 1Q21 gross margin (GM) narrowed by 5.0% pts yoy to 42.8% due to higher contribution of low-margin Safira condo properties.The decline in commission fee and marketing fee lowered the SG&A expenses ratio by 5.4% pts yoy to 8.5%.
• Consequently, net profit grew 32.8% yoy to VND205bn in 1Q21, fulfilling 16.3% of our full year estimate.

We maintain our forecast for KDH’s NP growth of 9.4% yoy in FY21F

• Management is guiding for FY21F net profit of VND1,200bn (+4.2% yoy), in line with our forecast (VND1,261bn), on the back of handovers from 4 projects namely Lovera Vista, Armena and the rest of Safira and Verosa Park.
• We expect the delivery of Lovera Vista from May 2021 which is likely to contribute VND2,838bn in FY21F revenue, in our estimate.

Strong presales in sight in FY21F

• Due to new projects likely launched in 2H21F, presales activities were slow in 1Q21. Therefore, 1Q21 presales only reached VND207bn in value (-83.9%
  yoy), in our estimation.
• KDH plans to launch three new projects in FY21F namely Clarita (5.7ha), Armena (4.3ha) and an apartment project (1.8ha) in Binh Tan District, which has a potential GDV of VND11,714bn (based on our estimate).
• We believe these projects could take advantages of residential prices hike in Thu Duc City and achieve high take-up rate thanks to their sought-after
  location as well as the shrinkage on new supply in HCMC.

Potential catalyst

Our mid- to long-term investment thesis depends on whether KDH can clear legal hurdles to launch its Tan Tao Residence Area project (329ha). According to AGM on 28 Apr, this project received investment approval, master plan of 1:500 scale, decision on land acquisition and in the process of compensation and site clearance (compensated c.190ha).

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