KDH released Q2 2021 financial statements with net revenue of VND1.1tn (USD48.3mn; +42% YoY) and NPAT-MI of VND265bn (USD11.5mn; +5% YoY) thanks to handovers of ~470 units at Lovera Vista (total project includes ~1,300 high-rise mid-end units in Binh Chanh District, HCMC — 88% pre-sold as of end-Q1 2021 with handovers starting in May 2021). 

H1 2021 performance was in line with our expectation as KDH’s net revenue and NPAT-MI reached VND1.9tn (USD84.7mn; +31% YoY) and VND470bn (USD20.4mn; +15% YoY), respectively, as they were primarily driven by sales/deliveries at Verosa Park (total project includes ~300 low-rise units — 96% sold as of end-Q1 2021), Safira (total project includes ~1,600 high-rise units — 100% sold) and Lovera Vista. We attribute the discrepancy between revenue growth (+31% YoY) and EBIT growth (+13% YoY) in H1 2021 mainly to the smaller number of units of Verosa Park (a low-rise project that carries higher margin) recorded in H1 2021 vs H1 2020.

For 2021, we currently forecast KDH’s NPAT-MI at VND1.37tn (USD59.7mn; +19% YoY), which is driven by our forecast for (1) completed sales at Verosa Park and handovers at Safira/Lovera Vista and (2) the expected launch of the new Armena project (total project includes ~180 low-rise units in Thu Duc City, HCMC) in Q4 2021, as stated in our last Update Report, dated March 5, 2021. We note that HCMC recently tightened measures on construction sites amid escalating COVID-19 cases, which may cause uncertainty regarding the Armena project’s launch, in our view. 

Per our discussion with management, the company completed legal procedures for Armena and has nearly completed them for the Binh Tan project (a high-rise project in Binh Tan District, HCMC). KDH will push construction progress for these projects when social distancing measures are eased to achieve the sales launch plan in H2 2021. Nevertheless, due to the recent complications caused by COVID-19 situation in Vietnam, the company will examine the progress of these projects carefully and may adjust if needed.