KBC - Sustained IP land sales in 2024G, in line with our expectations

KBC hosted its extraordinary general meeting (EGM) on March 28, 2024. Our key takeaways from the EGM are as follows:

2024 guidance: Shareholders approved 2024G guidance for total income (including revenue, financial income, and other income) of VND9tn (USD370mn) and NPAT of VND4tn (USD165mn), representing 115% and 172% of our respective 2024F forecasts. We attribute the gap between our forecast and KBC’s guidance mainly to our lower UA land sales forecast and lower projected GPM. Meanwhile, KBC’s guidance for IP land sales/handovers of 150 ha in 2024G (vs 151 ha in 2023) is broadly in line with our expectation of 155 ha in the year.

Figure: KBC’s NPAT actual and guidance from 2020 – 2023, guidance and projection for 2024

VND bn	2020	2021	2022	2023	2024
NPAT actual	320	1,352	1,577	2,218	2,326*
NPAT guidance	816	2,000	4,500	4,000	4,000
% achieved	39%	68%	35%	55%	N/A

Source: KBC, Vietcap compilation; Note (*) Vietcap forecast

Key projects: Management shared that the Trang Cat UA project has completed its revised 1/500 masterplan and finished filling land for around 100 ha. KBC is awaiting to pay the land use rights fee and will announce more updates on this project during its upcoming AGM by June 2024. Management also expects the Trang Cat UA project to further support KBC’s cash inflow in 2024. Meanwhile, the Trang Due 3 IP is currently in progress to obtain investment approval from the Prime Minister.

Cash dividend and treasury share purchase cancellation: Shareholders approved to cancel the EGM/AGM-approved plans for (1) the cash dividend payment plan of VND2,000/share and (2) the treasury share purchase plan for 100 million shares of KBC at a price not exceeding VND34,000/share. KBC stated that these plans are canceled because the company (1) bought back its bonds in 2023 to reduce total debt to VND3.7tn (USD151mn; -52% YoY) in end-2023, and (2) anticipates to disburse its available capital to expedite the progress of upcoming projects.

Others: Shareholders approved the listing of its bonds which will be issued in 2024 and before the 2025 AGM, as well as authorize the Board of Directors (BOD) to approve and report related parties’ transactions.

Overall, management’s 2024G guidance for the IP land sales is broadly in line with our expectations while the company has a more positive guidance on its key residential projects, such as the Trang Cat UA project. For 2024F, we expect the resilient IP land handovers (mainly from the end-2023 unbilled backlog of 34 ha and our 2024F IP land sales of 155 ha) and the YoY higher UA land recognition (mainly from 5 ha at Phuc Ninh UA) to drive our NPAT-MI forecast of VND2.1tn (USD88mn; +7% YoY) for KBC.