IDC - Slow IP land handovers in H1; new IP land sales remain positive

- IDC released Q2 2023 results with revenue of VND2.4tn (USD102mn; -27% YoY) and NPAT-MI of VND534bn (USD29mn; -63% YoY). The YoY declines are mainly due to unearned revenue of VND1.4tn (USD61mn) from the fully-occupied Nhon Trach 5 IP with a high GPM of 85% being recognized in Q2 2022.

- In H1 2023, IDC’s revenue declined 29% YoY to VND3.6tn (USD151mn) while its NPAT-MI fell 59% YoY to VND681bn (USD29mn), representing 45% and 37% of our respective full-year forecasts. As a result, we foresee potential downside risk to our 2023F NPAT-MI forecast of VND1.9tn (USD79mn; +5% YoY), pending a fuller review.

- H1 2023 IP land sales handovers were slightly lower than our expectation. If excluding VND1.4tn (USD61mn) of revenue from the Nhon Trach 5 IP in H1 2022 (which was recognized as a retroactive recognition) and including VND401bn (USD17mn) of revenue from the Que Vo 2 IP in H1 2023 (which was recognized as real estate revenue), we estimate the IP segment’s H1 2023 underlying revenue at VND1.5tn (USD62mn; -10% YoY) — completing 43% of our full-year forecast — and its underlying GPM at 54.5% vs 48.0% in H1 2022 and our full-year forecast of 61.6%.