SZC announced Q1 2023 results with revenue of VND63bn (USD2.7mn; -77% YoY) and NPAT-MI of VND12bn (USD0.5mn; -84% YoY), achieving 5% and 4% of our full-year forecasts, respectively.

In Q1 2023, SZC’s revenue plunged 77% YoY, which was mainly driven by a 90% YoY drop in revenue from IP land sales. We attribute this weak result to minimal IP land handovers in the quarter as cash collection for most contracts stagnated due to manufacturing headwinds from the global economic slowdown.

Q1 2023 GPM improved to 54.3%, which was primarily due to a 30-ppt GPM improvement in the IP segment and a high margin of 80% at the Huu Phuoc UA project. SZC’s GPM in Q1 2023 was 19 ppts higher than our full-year GPM forecast of 35.4%.