SZC - Q3 profit sustained by resilient IP land sales recognition

- SZC released its Q3 2023 results with revenue increasing 69% YoY to VND208bn (USD8.7mn) and NPAT-MI surging 136% YoY to VND55bn (USD2.3mn). The strong growth in NPAT-MI was primarily driven by a 51% YoY increase in revenue from IP land sales, along with a contribution from the residential segment.

- SZC’s 9M 2023 NPAT-MI edged up by 2% YoY to VND163bn (USD6.8mn), representing 72% of our full-year forecast and broadly in-line with our expectation. We anticipate no significant change to our 2023F NPAT-MI of VND227bn (USD9.5mn; +15% YoY).

- For the IP revenue segment, 9M 2023 revenue decreased by 28% YoY to VND460bn (USD19mn) and accounted for 82% of total revenue. GPM of this segment improved to 53.6% vs 39.1% in 9M 2022 and our 2023F forecast of 51.5%. We note that SZC has not provided details regarding its IP segment in terms of IP land leasing area and average leasing price during the specified period. SZC's unbilled backlog at the end of 2022 was ~60 hectares, according to the company.