- 2024-10-07T00:00:00
- Sector Reports
This report provides updates on industrial park (IP) stocks SIP, SZC, PHR, and GVR. We maintain our forecasts and valuations for IDC as per our August 15 Update Report, and KBC as per our August 13 Update Report.
IP sector outlook
We expect IP leasing demand to remain slow in H2 2024F but rebound in 2025F. We anticipate that clearer policy guidance and a more stable political landscape in the US, along with a more favorable lower interest rate environment, will support manufacturers' capital expenditure plans. The anticipated increase in supply of leasable area, driven by the completion of provincial masterplans and the conversion of rubber land to IP land, will enable developers to expand their land banks, thus driving a recovery in IP land sales in 2025F. We forecast aggregate IP land sales of select IP developers to decrease by 24% YoY in 2024F to 540 ha but to grow by 47%/12% YoY in 2025/26F to 792 ha/885 ha, respectively, vs strong growth of 69% in 2023E (see Figure 3).
Vietnam’s long-term FDI attractiveness remains strong, underpinned by the ongoing trend of global manufacturers relocating to the country, its competitive labor costs, a broad range of free trade agreements, and the transition to advanced manufacturing through technology transfers and upskilling initiatives, particularly in sectors like semiconductors.
Our top stock picks are IDC, KBC, and SIP. We believe IDC and KBC are poised to benefit from significant FDI inflows by attracting top tenants and utilizing financial strength to secure new land for attracting customers. We also like SIP, which possesses ample land bank in the south.
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