IDC - Strong land handovers due to large backlog; H1 land sales trail our expectations - Analyst Meeting Note
  • 2024-08-05T00:00:00
  • Company Research

We attended IDC’s August 5 analyst meeting and our key takeaways are below:  

* IP land sales: In H1 2024, IDC had IP land sales of 43.3 ha in contracts/MOUs (vs our 2024F forecast of 145 ha), among which IP land sales at Huu Thanh, Que Vo 2, Phu My 2 Expansion, Cau Nghin & Phu My 2 IPs were 16.1 ha, 13.6 ha, 9.1 ha, 2.5 ha, and 2.0 ha, respectively. The company anticipates IP land sales to pick up in upcoming quarters as it is discussing some large contracts with clients and maintains its 2024G IP land sales guidance of 145 ha.  

* IP land handovers: IDC handed over 65 ha in H1 2024 (vs our 2024F forecast of 110 ha), among which are (1) 46 ha from IP land sales made in 2023 and (2) 19 ha from new contracts in H1 2024. IDC expects to recognize around 30-50 ha of IP land sales in H2 2024G, among which is the remaining ~30 ha of unbilled backlog from Hyosung in the Phu My 2 IP, depending on the payment progress. We estimate that the unbilled backlog at end-Q2 2024 amounted to ~104 ha (80 ha from 2023 contracts/MOUs and 24 ha from H1 2024 contracts/MOUs).

* Selling prices: Average asking prices of IDC’s current IP projects slightly increased to ~USD135/sqm at end-Q2 2024 from ~USD129/sqm at end-2023. Among its projects, the prices at Huu Thanh, Que Vo 2, and Cau Nghin have increased to around USD161/sqm, USD150/sqm, and USD81/sqm (vs end-2023 prices of around USD148/sqm, USD119/sqm, and USD77/sqm), respectively. Additionally, the prices at Phu My 2 and Phu My 2 Expansion have remained broadly stable at ~USD124/sqm and ~USD126/sqm, respectively.

* Tan Phuoc 1 IP: This IP (total site area of 470 ha; Tien Giang Province) is expected to launch by end-2025G, per IDC. As 100% of the land is agriculture land owned by the Government, IDC targets to complete land clearance for Phase 1 (around 360 ha) by end-2024/early 2025 and the remaining by 2026. This guidance is broadly in line with our expectation as we currently anticipate this project to start contributing to IDC’s IP land sales by 2026F.

* Overall, we anticipate potential downside risks to our 2024F IP land sales, pending a fuller review. Please also refer to our July 29 Earnings Flash for IDC’s Q2 2024 results.

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