december,2020 industrial real estate overweight

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT

Vietnam

Industrial Real Estate 29 December, 2020

Overweight (Updated report)

Great opportunities

Mirae Asset Securities (Vietnam) LLC. Pham Binh Phuong, [email protected]

Industry prospective Vietnam’s open economy boosts its attractiveness for FDI

Vietnam is considered to be one of the most open economies in the world. Vietnam has trading

relationships with more than 200 countries around the world through its membership in trade

organizations such as the WTO and CPTPP, as well as being a signatory to 12 free trade agreements

(FTAs). After joining the WTO in 2006, Vietnam's annual FDI more than tripled, going from US$12bn to

US$38bn in 2019.

Vietnam a destination for capital flows, thanks to successful control of COVID-19 pandemic

Vietnam has received recognition for its effective containment of the Covid-19 pandemic, thereby

escaping economic downturn. Vietnam became the only country in ASEAN, and one of the few

countries in the world, to achieve positive growth. With GDP growth forecast at 2.4% in 2020, Vietnam

ranks first in Southeast Asia. This factor has helped Vietnam continue to maintain FDI, at more than

US$26.4bn for the first 11 months of 2020, exceeding that of FY18.

Industrial park developers race to increase land funds

BW Industrial Development Joint Stock Company (a joint venture between Becamex IDC and Warburg

Pincus LLC-USA) has increased its total industrial land area from 209 ha to 500 ha across 10 provinces.

The largest private corporation in Vietnam, Vingroup, has invested more than US$400mn to develop

two industrial parks (200 ha) in Nam Trang Cat and 319 ha in Thuy Nguyen (Dinh Vu EZ). KBC plans

to add 238 ha to its land bank in the Nam Son Hap Linh Industrial Park (Bac Ninh) by the end of 2021.

TIZCO Joint Stock Company and Vietnam Joint Stock Industrial Park Management Sang Tao (VNIPM)

will contribute capital to the Viet Phat Industrial Park in Long An, with a total area of 1,800 ha.

Current difficulties Shortage of industrial land funds in key areas

The sharp increase in average occupancy rates since 2018 has led to shortages in supply and

demand for new industrial zones in key areas (industrial sector level 1). Replenishing supply in these

areas is difficult, due to the government's policy of downsizing and relocating factories from cities.

Business conditions improve, but still lag behind those in regional peers

The quality of Vietnam's transport infrastructure still lags behind that of regional peers, according to

Fiingroup's Vietnam Logistics Report 2019 (see Figure 3). Transport infrastructure is a significant

barrier to investment attraction in the grade 2 industrial areas.

Despite improvements in recent years, Vietnam’s Ease of Doing Business ranking is currently only

69.8, behind Singapore, Taiwan, Thailand, China, and India (see Figure 4). These countries are

considered as competitors of Vietnam in attracting FDI in the current period.

Listed companies Mixed performance in 9M20

Total revenue of the sector’s 18 listed companies (see Table 3) reached VND21,539bn, down by 6.8%

YoY, with after-tax-profit of VND3,634bn (-13.9% YoY). However, amid an overall picture of unprofitability

for the industry, some businesses recorded growth in after-tax-profit of 30% or higher, including HPI

(+29.6% YoY), IDV (+80.5% YoY), LHG (+37.5% YoY), NTC (+35.9% YoY), SIP (+64.7% YoY), SZC

(+41.3% CK), and TID (+625.4% YoY). Most of these companies still have commercial land funds that

are ready for lease.

Notable companies

Companies that have available land for lease and will continue to have more land funds in 2021 (with

investments in previous years) include BCM, IDC, KBC, and SZC (see Table 4).

Industrial Real Estate

Mirae Asset Securities (Vietnam) LLC 2

29 December 2020

Table of contents

Industry outlook Error! Bookmark not defined.

1. Vietnam’s open economy boosts its attractiveness for FDI 3

2. Vietnam a destination for capital flows, thanks to successful control of COVID-19 4

3. Industrial park developers race to increase land funds 5

Current issues Error! Bookmark not defined.

1. Shortage of industrial land funds in key areas 7

2. Business conditions improve, but still lag behind those in regional peers 7

Listed companies Error! Bookmark not defined.

1.Companies with remaining land funds recorded impressive results 9

2. Notable companies 9

Investment And Industrial Development Corp Error! Bookmark not defined.

IDICO Corporation - JSC 12

Kinh Bac City Development Share Holding Corporation Error! Bookmark not defined.

Sonadezi Chau Duc 14



29 December 2020

Industry Outlook

1. Vietnam’s open economy boosts its attractiveness for FDI

Vietnam is considered to be one of the most open economies in the world. Vietnam has trading

relationships with more than 200 countries around the world through its membership in trade

organizations such as the WTO and CPTPP, as well as being a signatory to 12 free trade

agreements (FTAs) with more than 57 countries (see Table 1), including the Trans-Pacific

Partnership (CPTPP) between Vietnam and 10 other Asia-Pacific countries (Canada, Mexico,

Peru, Chile, New Zealand, Australia, Japan, Singapore, Brunei, and Malaysia).

Table 1: Vietnam’s free trade agreements

Name Effective date Partners

FTAs that Vietnam has joined

AFTA 1993 ASEAN

ACFTA 2003 ASEAN, China

AKFTA 2007 ASEAN, Korea

AJCEP 2008 ASEAN, Japan

AIFTA 2010 ASEAN, India

AANZFTA 2010 ASEAN, Australia, New Zealand

VCFTA 2014 Vietnam, Chile

VKFTA 2015 Vietnam, Korea

VN - EAEU FTA 2016 Vietnam, Russia, Belarus, Armenia, Kazakhstan, Kyrgyzstan

AHKFTA 2019 ASEAN, Hong Kong (China)

EVFTA 2020 EU (27 members)

FTAs not yet ratified

RCEP Signed on 15/11/2020 ASEAN, China, Korea, Japan, Australia, New Zealand

UKVFTA Concluded negotiations on 11/12/2020

Vietnam, UK

Source: Ministry of Industry and Trade

Actively participating in trade agreements has helped Vietnam attract FDI continuously in

recent years. After joining the WTO in 2006, Vietnam's annual FDI more than tripled, going

from US$12bn to US$38bn in 2019. The COVID-19 pandemic had a negative impact on FDI

attraction in the first half of the year, but it experienced a recovery in the second half of the

year. Total FDI attraction in the first 11 months of 2020 reached more than US$26.4bn,

exceeding the value of 2018.



29 December 2020

Figure 1: Vietnam’s FDI performance

Source: General Statistics Office

According to a survey in May 2020 by the Australian Chamber of Commerce in ASEAN

(AustCham), Australian businesses consider Vietnam as the destination with the most

favorable conditions for expanding business investment, surpassing Australia’s other

traditional investment partners, such as Singapore or Malaysia. Vietnam is also ranked 25th

out of 60 of the most attractive countries in the world for FDI attraction by IHS Markit Company

(UK) and the University of Tennessee (US). It is worth noting that Vietnam has surpassed

those Southeast Asian countries that have traditionally been effective in attracting FDI, such

as Thailand, Indonesia, and the Philippines.

2. Thanks to its successful control of Covid-19, Vietnam is prime beneficiary of the shift in factories

out of China

Vietnam has received recognition for its effective containment, thereby escaping economic

downturn. Vietnam is the only country in ASEAN, and one of the few countries in the world, to

achieve positive growth. According to forecasts by international organizations, such as the

ADB, IMF, and WB, by 2020, only four economies in the world will have growth in GDP per

capita: Vietnam, Taiwan, Egypt, and China.

With expected GDP growth in 2020 of 2.4%, Vietnam ranks first in Southeast Asia.

Figure 2: Annual GDP growth

Source: CEIC, IMF

-

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nov -20

FDI Registed FDI disburbed

-10

-8

-6

-4

-2

0

2

4

6

8

10Việt Nam Malaysia Thái Lan Indonesia Philippin Singapore Trung Quốc

2019 2020E 2021E



29 December 2020

The pandemic and the US-China trade war have prompted many multinational corporations

to accelerate the relocation process. Being highly regarded for its political stability and growing

economy, Vietnam has become a desired destination.

According to Nomura Group statistics (2019), from the beginning of 2018 to August 2019, out

of 56 foreign enterprises that moved production lines out of China, 26 of them (46.4%) chose

Vietnam, 11 chose Thailand, and 11 chose Taiwan. During the first outbreak of Covid-19,

Apple suppliers, such as Pegatron and Foxconn from Taiwan; Sharp, Nintendo, and Komatsu

from Japan; and Lenovo from Hong Kong, moved their production lines to Vietnam.

In 2020, the wave of Japanese enterprises shifting production to Vietnam or expanding

existing production there (see Table 2) will continue to be a bright spot for the country’s real

estate industry and industrial zones.

Table 2: Japanese companies relocating or expanding production lines in Vietnam in 2020

List Company Business scale Sector

1 Shin-Etsu Chemicals Co. Ltd. Large Chemicals

2 Hoya Lens Co. Ltd Large Glass

3 Matsuoka Corporation Large Garment manufacturing

4 Meiko Electric Ltd Large Electronics

5 Yokoo Vietnam Large Metal

6 Nikkiso Co. Ltd Large Components for aerospace industry

7 Akiba Coating & Technology SME Manufacture of electrical module

8 Inoue Iron Works Co. Ltd SME Metal

9 Able Garment Co. Ltd. SME garment manufacturing

10 Showa Company Limited SME Rubber products

11 Techno Global SME Electronics

12 Hashimoto Co. Ltd SME Plastic product

13 Fujikin Company Limited SME Mechanicals equipment

14 Plus Co. Ltd. SME machine and equipment

15 Pronics Co. Ltd. SME machine and equipment

Source: Savills Vietnam

3. Industrial developers actively increased land banks

The strong leasing demand for industrial property has primarily driven an expansion in areas

zoned and planned for the purpose of industrial development. BW Industrial development JSC.

(a joint venture between Warburg Pincus LLC-USA and Becamex IDC) has increased its total

industrial land nationwide (10 provinces and cities) from 209 ha in 1H18 to 500 ha to date.

Vietnam's largest private enterprise, Vingroup, plans to invest more than US$400mn in its

subsidiary, Vinhomes Industrial Park Investment and Development JSC. The Group's first two

projects will be developed in Hai Phong, including the Nam Trang Cat Industrial Park, with a

total area of 200 ha, and Thuy Nguyen Industrial Park, with a total area of 319 ha. Both are

expected to enter operation in 2021. In 4Q21, the new, 238-ha Nam Son Hap Linh Industrial

Park of Kinh Bac Urban Development Corporation (KBC) will enter operation in Bac Ninh

province. Also in 4Q21, TNI Holdings Vietnam will inaugurate the Song Lo 1 Industrial Park,

with an area of 177 ha, in Vinh Phuc province. In the southern province of Long An, TIZCO

Joint Stock Company and Vietnam Creative Industrial Park Management Joint Stock

Company (VNIP) will contribute capital to the Viet Phat Industrial Park, with a total area of

1,800 ha by 2021.



29 December 2020

Global logistics developers have entered the market, despite the ongoing pandemic. Logos

Property from Australia invests in Vietnam through a logistics development joint venture (JV)

worth US$350mn. GLP, the largest warehouse developer in Asia, is planning a US$1.5bn joint

venture with SEA Logistics Partners (SLP). Mirae Asset Daewoo Co. and Naver Group of

Korea jointly invested US$37mn in LogisValley logistics center in Bac Ninh province.



29 December 2020

Current issues

1. Land scarcity for industrial development in key areas

The sharp increase in average occupancy rates since 2018 has led to a shortage of supply

and demand for new industrial zones in tier I provinces. In the South, the occupancy rate

reached 88% in Ho Chi Minh City, 99% in Binh Duong, 94% in Dong Nai, and 84% in Long

An. In the North, the rates reached 90% in Hanoi, 95% in Bac Ninh, 89% in Hung Yen, 82%

in Hai Duong, and 73% in Hai Phong. In the long term, the supply of industrial land in these

areas is expected to decline, due to the government's policy of downsizing and relocating

factories located in urban areas.

The industrial land supply in tier II provinces are being targeted by industrial development

companies to expand their land bank. These areas include Vinh Phuc, Bac Giang, Quang

Ninh, Ha Nam, Nam Dinh and Thai Binh in the southern region, and the South includes Tay

Ninh, Binh Phuoc and Ba Ria - Vung Tau.

2. Business conditions improve, but still lag behind those in regional peers

The quality of Vietnam's transport infrastructure still lags behind that of regional peers,

according to Fiingroup's Vietnam Logistics Report 2019 (see Figure 3). Transport

infrastructure is a significant barrier to investment attraction in the grade 2 industrial areas.

In recent years, Vietnam has promoted investment in infrastructure development. According

to the Asian Development Bank (ADB), investment in infrastructure in both the public and

private sectors of Vietnam accounts for 5.7% of annual gross domestic product, the highest

in Southeast Asia; countries like Indonesia or the Philippines spend less than 3%, while

Thailand and Malaysia spend less than 2%. In all of Asia, Vietnam is second-only to China,

which spends 6.8% of its GDP on infrastructure development.

Despite improvements in recent years, Vietnam’s Ease of Doing Business ranking is currently

only 69.8, behind Singapore, Taiwan, Thailand, China, and India (see Figure 4). These are

also countries that are competitors to Vietnam in attracting FDI in the current period.

Figure 3: Comparison between infrastructure in Vietnam and Southeast Asia

Figure 4: Ease of Doing Business rankings in 2020

Source: Fiinpro’s Vietnam Logistics Report 2019 Source: World Bank

0

1

2

3

4

5

Infastruture Road Railway Ports Airlines

Vietnam ASEAN

0102030405060708090

100



29 December 2020

The World Bank indicates two factors that have a negative influence on Vietnam’s Ease of

Doing Business ranking: Clearance time and cost. According to a World Bank report,

Vietnam’s customs clearance time in 2018 was 105 hours for exported goods and 132 hours

for imported goods, less competitive than Malaysia, Thailand, and Singapore (see Figure 5).

Vietnam also has some of the highest customs clearance costs in Southeast Asia, with an

average cost of US$425 for exports and US$556 for imports, higher than Indonesia,

Singapore, and Malaysia. Thailand (see Figure 6).

Time for trading across border: According to World Bank report, Vietnam’s time for

trading across borders in 2018 was 105 for exported goods and 132 hours for imported

goods; this is less competitive than Malaysia, Thailand, or Singapore (see Figure 5).

Vietnam also has some of the highest costs for trading across borders in Southeast Asia,

with an average cost of US$425 for exports and US$556 for imports, higher than

Indonesia, Singapore, Malaysia, and Thailand (see Figure 6).

Figure 5: Trading across borders: Time Figure 6: Trading across borders: Costs

Source: WB Source: WB

− High logistics cost: Vietnam’s logistics costs are relatively high compared with the

region’s and world’s averages. According to international business performance

evaluation organization Armstrong & Associates, Vietnam’s total logistics costs in 2019

account for about 25% of total GDP, while this figure is only 9–14% in developed countries.

Transport costs account for nearly 60% of logistics costs, as goods are mainly transported

by road (according to the General Statistic Office, the volume of goods transported via

road in 2019 accounts for 75% of total goods’ volume)

Figure 7: Logistics costs/GDP

Source: Vietnam Association of Logistics Services 2019

0

50

100

150

200

250Hours

Export Import

0

200

400

600

800

1000US$

Export Import

14%

8%

11%

18%

25%

0%

5%

10%

15%

20%

25%

30%

Global Singapore Japan China Vietnam



29 December 2020

Listed companies

1. Companies with land banks recorded impressive results

Although the real estate industry’s outlook is positive, the 9M20 business results of industrial

real estate (IP real estate) businesses were not positive. Total revenue of the sector’s 18 listed

companies (see Table 3) reached VND21,539bn (-6.8% YoY), with after-tax-profit of

VND3,634bn (-13.9% YoY).

The main reasons for the IP real estate industry’s poor results are: 1) record-high profits in

2019, thanks to the wave of relocating factories; 2) declines in 2020 profits for large

enterprises without available land, such as KBC, IDC, and D2D; and 3) lower deposit interest

rates in 2020, which hit the financial revenue of many businesses.

Table 3: Summarized earnings results of industrial real estate companies

List Code Name Stock exchange

Revenue in 9M2019

Revenue in 9M2020

Changes (YoY)

NPAT 9M2019

NPAT 9M2020

Changes (YoY)

P/E P/B

1 BCM Becamex IDC HOSE 4,774 5,210 9.1% 1,674 1,184 -29,3% 20.3 2,7

2 D2D Industrial urban development JSC no 2

HOSE 398 212 -46.6% 238 184 -22,7% 5.0 1,9

3 HPI Hiệp Phước industrial park

UPCOM 491 326 -33.7% 101 131 29,6% 6.6 11,1

4 IDC IDICO HNX 3,553 3,357 -5.5% 327 214 -34,7% 32.0 2,7

5 IDV Vinh Phuc infrastructure development

HNX 97 111 15.0% 75 136 80,5% 4.8 2,0

6 ITA Tan Tao investment and industry corporation

HOSE 820 549 -33.1% 195 184 -5,4% 24.5 0,4

7 KBC Kinh bac city development share holding corporation

HOSE 2,486 930 -62.6% 500 30 -94,0% 21.3 0,7

8 LHG Long Hau corporation HOSE 330 460 39.4% 98 134 37,5% 9.5 1,3

9 MH3 Binh long Rubber Industrial Park Corporation

UPCOM 39 43 11.3% 37 38 1,0% 8.6 3,3

10 NTC Nam Tan Uyen joint stock company

UPCOM 140 195 38.6% 176 239 35,9% 19.1 7,8

11 PXL Long Son petroleum industrial zone investment JSC

UPCOM 14 0 -97.4% 11 8 -21,7% 85.5 1,0

12 SIP Saigon VRG Investment corporation

UPCOM 3,104 3,417 10.1% 383 631 64,7% 14.1 4,9

13 SZB Sonadezi Long Binh HNX 253 261 3.2% 77 87 13,3% 9.86 1,9

14 SZC Sonadezi Chau Duc HOSE 283 362 27.8% 115 162 41,3% 15.8 2,3

15 SZL Sonadezi Long Thanh HOSE 273 264 -3.2% 74 73 -0,9% 9.46 1,8

16 TID Tin Nghia corporation UPCOM 5,750 5,560 -3.3% 10 72 625,4% 33.8 1,7

17 TIP Tin Nghia industrial park development

HOSE 144 145 0.5% 65 60 -8,5% 10.0 1,6

18 TIX TANIMEX HOSE 161 137 -14.6% 67 66 -0,9% 10.1 1,1

Ngành

23,111 21,539 -6.8% 4,223 3,634 -13,9% 18.9 2.8

Source: Fiinpro

Amid an overall picture of negative profitability for the industry, there were some bright spots,

with a number of companies recording growth in after-tax-profit of 30% or higher, including

HPI (+ 29.6% YoY), IDV (+ 80.5% YoY), LHG (+ 37.5% YoY), NTC (+ 35.9% YoY), SIP (+

64.7% YoY), SZC (+ 41.3% YoY), and TID (+ 625.4% YoY). Most of these businesses still

have available land for lease and benefited from the increase in industrial park rental rates in

2020.

Thus, those companies with ready-for-lease land banks or the ability to expand new land

banks in 2021 have the brightest prospects going forward.



29 December 2020

2. Watchlist

Land funds are the most important factor for real estate companies in industrial zones; thus,

we prioritize the selection of enterprises with potential land banks, including available land for

lease and new land funds from 2021 onwards.

Companies that have available land for lease and will continue to have more land funds in

2021 (with investments in previous years) include BCM, IDC, KBC, and SZC (see Table 4).

Table 4: Companies with large land funds

CODE Ready

for lease Location

Expansion in 2021

Location Market

cap (VNDbn)

EPS ROE ROA P/E P/B

Average trading value in

6M (VNDbn)

BCM 710 Binh Duong 1,575 10 provinces and cities

41,607 1,971 12.94% 4.57% 20.39 2.75 6.47

IDC 495 Ba Ria Vung Tau, Bắc Ninh

398 Long An, Thai Binh 9,720 1,010 7.14% 2.10% 32.09 2.75 13.85

KBC 395 HCM, Bac Giang 238 Bac Ninh 7,445 743 3.34% 1.93% 21.33 0.79 35.97

SZC 759 Ba Ria Vung Tau 380 Ba Ria Vung Tau 2,890 1,829 15.33% 5.42% 15.80 2.33 33.30

Source: Fiinpro, MAS research



BUY (Updated report)

Target price: VND 50,000 (Upside +24.4%)

Investment And Industrial Development Corp (HOSE: BCM)

Vietnam’s leading industrial developer

Mirae Asset Securities (Vietnam) LLC. Phạm Bình Phương, [email protected]

Important data

Price in 11/12/20 (VND) 40,200

Market cap (VNDbn) 41,918

Profit after tax (20F, VNDbn) 2,600 Shares outstanding (mn shares) 1,035

EPS growth (20F, %) 4 Free float (%) 4.6

Market EPS growth (20F, %) n/a Foreign ownership (%) 1.8

P/E (20F, x) 21.1 Beta (12M) 1.0

Marker P/E (20F, x) 16.3 52-week low (VND) 15,500

VN-Index 1,046 52-week high (VND 50,200

Performance Earnings and valuation metrics

(%) 1M 6M 12M

Absolute 3.1 49.4 42.0

Relative -5.2 27.3 33.8

FY (31/12) 2018 2019 2020 (F)

Revenue (VND bn) 6,571 8,213 7,162

OP (VND bn) 2,063 1,812 1,990

OP margin (%) 31.4 22.1 27.7

NPAT (VND bn) 2,211 2,487 2,600

EPS (VND) 2,045 2,332 2,512

ROE (%) 15.5 17.7 18.9

P/E (x) 12.9 12.8 21.1

P/B (x) 2.1 2.0 2.7

Dividend yield (%) 2.0 2.0 1.0

Note: NPAT is the profit after subtracting non-controlling interest

Source: Company data, Bloomberg, Mirae Asset VN Research

Valuation Using P/B and RNAV methods, we determined the fair value of Investment and Industrial Development Corp (BCM)

at VND50,000/share, corresponding to a P/E of 25x and P/B of 3.42x (TTM). This price is 24.4% higher than the

closing price on 11/12/2020; thus, we recommend BUY for BCM.

Overview BCM is the owner of the largest IP land bank in Vietnam, with the total size of projects managed by the company

around 15,000 ha, including joint ventures VSIP (BCM owns 49%) and BW (BCM owns 30%). In addition, BCM

owns nearly 1,000 ha of urban land for the Binh Duong New City project.

Investment thesis Promising land bank

• Since 2018, BCM has implemented many new industrial zone projects through the VSIP and BW (Becamex-

Warburg Pincus) joint ventures. Specifically, the VSIP joint venture has implemented three projects: 1) VSIP Binh

Dinh in the Nhon Hoi economic zone, Quy Nhon, with a commercial area of 1,000 ha; 2) the VSIP III Industrial

Park in Tan Uyen, Binh Duong, with an area of 1,000 ha; and 3) the VSIP Bac Ninh, with an area of 273 ha.

Meanwhile, the BW joint venture focuses on developing a ready-built factory for rent. Up to now, this joint venture

has managed a land bank of about 500 ha in 10 provinces and cities. BCM has also completed the legal process

and implemented the first phase of the 311 ha Becamex Binh Phuoc project, with the current land clearance

progress at over 80%. Based on the proportion of capital contribution of the aforementioned projects, the potential

land bank of BCM in 2021 is about 1,575 ha

Becamex’s old industrial zones all have occupancy rates of nearly 100%. In addition, new industrial zones, such

as the Bau Bang industrial Park (2015) and expanded Bau Bang Industrial Park (2017), have recently been put

into operation. These are also attracting investment, and currently have occupancy rates of 88% and 37%,

respectively. The total industrial land available for lease of BCM currently reaches about 710 ha, mainly located

in Binh Duong province, the hot spot in attracting FDI.

c r un ug ct c

VN n VN


(VX


Buy (Updated Report)

Target price: VND 40.000 (Upside +23,4%)

IDICO Corporation - JSC (HNX: IDC)

Opportunity arises after divestment

Mirae Asset Securities (Vietnam) LLC. Pham Binh Phuong, [email protected]

Important data

Price in 11/12/20 (VND) 32,400

Market capital (VND bn) 9,930

Profit after tax (20F, VND bn) 553 Shares outstanding (mn shares) 300


Market EPS growth (20F, %) n/a Foreign ownership (%) 0,0

P/E (20F, x) 18 Beta (12M) 0.6

Market P/E (20F, x) 16.3 52 week low 15,000

VN-Index 1,046 52 week high 34,700


(%) 1M 6M 12M

Absolute 22,3 77,0 69,6

Relative 14,0 54,9 61,4

FY (31/12) 2016 2017 2018 2019 2020

(Forecast)

Revenue (VND bn) 4,426 4,921 5,119 4,929 5,474

OP (VND bn) 280 560 634 559 860

OP margin (%) 6.3 11.4 12.4 11.3 15.7

NPAT (VND bn) 391 335 349 345 553

EPS (VND) 1,165 1,149 1,843

ROE (%) 11.2 10.6 10.0 16

P/E (x) 19.7 16.4 18

P/B (x) 2.0 1.6 2.7

Dividend yield (%) 2.6 3.1

Note: NPAT is the profit after subtracting non-controlling interest.

Data: Company data, Bloomberg, Mirae Asset VN Research

Valuation Based on P/B and RNAV methods for valuation, we determine the fair value of IDC at VND40,000/share,

corresponding to P/E of 40x and P/B of 3.38x (TTM). This price is 23.4% higher than the closing price on 12/11/20,

therefore we recommend Buy on IDC.

Overview Idico Corporation (IDC) has total assets of more than VND14,000bn. It operates in three main areas: 1) industrial

zone infrastructure development, with the company currently managing and operating 17 nationwide projects with

an area of up to 7,000 ha (contributing 15.1% of revenue and 27% of gross profit in 2019); 2) the power-generation

sector, with the company owning four hydropower projects with a total capacity of 333MW, at an investment value

of about US$409mn (contributing 63.1% of revenue and 37.2% of gross profit in 2019); and 3) transport

infrastructure, with IDC investing in the construction and operation of many key projects, with a total investment

of over VND25,000bn (contributing 14.6% of revenue and 35.8% of gross profit in 2019).

Investment thesis • The company currently has 495 ha of available land for lease in industrial zones: Phu My II

(BRVT), with remaining commercial land area of 95 ha; expanded Phu My (BRVT), with remaining

commercial land area of 264 ha; and Que Vo II (Bac Ninh), with remaining commercial land area of 136

ha. These the leading areas for FDI attraction in 2020.

• In 2021, the company may increase its commercial land bank up to 398 ha from the Huu Thanh-

Long An industrial park project: The project commenced on June 6, 2020, with a scale of 524.14 ha,

and expected investment capital of about VND5,253bn. The industrial land for lease is over 398 ha. It

is expected that IDC will lease around 5 ha at the price of US$100/m2 from 2020 to 2069.

• The Ministry of Construction divests capital to stimulate businesses in the long term: On

November 27, 2020, the Ministry of Construction (MOC) completed the divestment process of 36% of

IDC's capital, earning VND2,909bn. The current IDC shareholder structure is private individuals and

organizations, including SSG Group Joint Stock Company, which owns 22.5%, and Bitexco Group

Company Limited, which owns 22.5%. The group of investors in the acquisition of MOC's capital

includes one organization and eight individuals. For GCs with large assets, such as IDC, we believe

that privatization will help these firms manage their assets more effectively.

c r un ug ct c

VN n VN



29 December 2020


Trading Buy (Updated Report)

Target report: VND17,700 (Upside +11.6%)

Kinh Bac City Development Share Holding Corporation (HOSE: KBC)

Promising prospects in 2021

Mirae Asset Securities (Vietnam) LLC Pham Binh Phuong, [email protected]

Important data

Price in 11/12/20 (VND) 15,850

Market Cap (VND bn) 7,540

NPAT (21F, VND bn) 1,089 Shares outstanding (mn shares) 470


Market EPS growth (20F, %) n/a Foreign ownership (%) 18.3

P/E (21F, x) 6.9 Beta (12M) 0.9

Market P/E (20F, x) 16.3 52 week low 10,000

VN-Index 1,046 52 week high 16,900


(%) 1M 6M 12M

Absolute 10.5 5.0 7.8

Relative 2.2 -17.2 -0.4

FY (31/12) 2016 2017 2018 2019 2020

(Forecast)

2021

(Forecast)

Revenue (VND bn) 1,972 1,260 2,491 3,210 1,800 3,200

OP (VND bn) 953 473 1,162 1,533 921 1,600

OP margin (%) 48.3 37.5 46.6 47.8 51.2 50

NPAT (VND bn) 557 585 746 918 576 1,089

EPS (VND) 1,186 1,244 1,588 1,955 1,225 2,317

ROE (%) 7.5 7.3 8.6 10.0 6.2 11.7

P/E (x) 11.7 10.8 8.3 7.9 13.3 6.9

P/B (x) 0.8 0.8 0.7 0.8 0.87 0.7

Dividend yield (%) 6.5



Valuation We maintain our target price of VND17,700 for Kinh Bac City Development Share Holding Corporation (KBC).

At this price, KBC is trading at a P/E of 19.34x and P/B at 0.87x (TTM). The target price is 11.6% higher than the

closing price of December 11, 2020. Based on that, we recommend trading buy KBC.

Investment thesis Disappointing results in 2020, due to slow implementation of projects

In 2020, KBC launched a business plan based on the planned handover of about 40 ha in the Nam

Son Hap Linh Industrial Park (NSHL); 30 ha in the Quang Chau Industrial Park; 30 ha in the Tan Phu

Trung Industrial Park; and 11 ha in the Trang Due urban project.

However, the land fund in Quang Chau Industrial Park is in the clearance and land handover process

(KBC is expected to receive 90 ha in the Quang Chau Industrial Park in 2020). In addition, NSHL has

just approved a plan of 108 ha area in October 20202021?. Thus, KBC’s 9M20 business results

are disappointing.

In the first 9 months of the year, KBC achieved net revenue of VND929.6bn, down 62.6% YoY, and

net profit of VND30bn, down 94% YoY. Earnings per share (EPS) in 9M20 is VND64. In 2020, KBC

proposed two business plans: Under the low plan, total consolidated revenue is expected to be

VND3,200bn, and total consolidated profit after tax VND816bn. By the end of 9M20, KBC has only

completed 29% of the revenue target and nearly 12% of the profit target.

Profit recovery from 4Q20, prosperity in 2021

From 4Q20, KBC’s revenue and profits will recover, thanks to profits from Tan Phu Trung (20 ha),

Quang Chau (30 ha), and the sale of the land fund of theTrang Due urban area. Based on that, in

2020, the company may record a decline of 45% YoY (VND1.8bn). In addition, NPAT in 2020 reached

VND574bn, down by 44.6%CORRECT?, achieving 70% of the 2020 target.

KBC should see a recovery in 2021, when the first stage of the NSHL project is deployed, with an

area of 100 ha. Accordingly, KBC will hand over a land fund of 60 ha for Taiwanese investors (MOU

already signed).

With the deployment of the NSHL project, we expect KBC to earn revenue of VND3,200bn (+77%

YoY) and NPAT of VND1,089bn (89% YoY) in 2021.

We focus on KBC's capabilities in implementing the Trang Cat (Hai Phong) project in 2021, when the area will

become more active, with the participation of Vinhome (VHM)

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Industrial Real Estate 14 December,2020

Trading Buy (Updated report)

Target price: VND 31,900 (Upside +10.3%)

Sonadezi Chau Đuc Shareholding Company (HOSE: SZC)

Low point in 2020 earnings results

Mirae Asset securities (Vietnam) LLC. Pham Binh Phuong, [email protected]

Important data

Price in 11/12/20 (VND) 28.900

Market cap (VND bn) 2.970

NPAT (20F, VND bn) 206 Shares outstanding (mn shares) 100

EPS growth (20F, %) 84 Free float (%) 42,0

Market EPS growth (20F, %) n/a Foreign ownership (%) 1,1

P/E (20F, x) 13,7 Beta (12M) 0,9

Market P/E (20F, x) 16,3 52 week low 11.900

VN-Index 1.046 52 week high 30.550


(%) 1M 6M 12M

Absolute 9,3 48,6 70,0

Relative 1,0 26,4 61,7

FY (31/12) 2016 2017 2018 2019 2020 (F) 2021 (F)

Revenue (VND bn) 101 220 290 329 465 535

OP (VND bn) 39 78 111 139 242 268

OP margin (%) 38.0 35.5 38.2 42.2 52.0 50

NPAT (VND bn) 44 73 97 134 206 228

EPS (VND) 399 657 779 1,140 2,100 2,276

ROE (%) 6.0 6.8 9.7 16.49 16.67

P/E (x) 15.5 13.7 12.7

P/B (x) 1.5 2.3 2.1

Dividend yield (%) 4.5 3.4 3.4



Valuation We raise our target price for Sonadezi Chau Đuc Shareholding Company (SZC) to VND31,900, an increase of

19.4%, as the overall valuation of the industry has increased by 17%, along with a 20% increase in SZC’s land

bank. We recommend Trading Buy, with an expected return of 10.3% compared with the closing price on

11/12/2020.

Investment thesis Positive prospects for revenue and profit in 4Q20 and 2021

SZC's new leasing activities have been promoted quickly to overcome the revenue decline in 3Q20.

By the end of 3Q20, SZC's buyer short-term prepayment was VND469bn, up VND162bn from end-

2Q20. On this basis, we project that the business can record about VND100bn in revenue (double

that of the same period in 4Q19), bringing SZC's total 2020 revenue to VND465bn (+41% YoY).

The increase in rental price helped SZC's gross profit margin improve to 56.6% in 9M20, versus 42.2%

in 9M19. Net profit after tax (NPAT) in 2020 is expected to reach VND206bn (+54% YoY).

Although rental prices become higher, SZC still signed many new lease contracts in 3Q20. Particularly

in September 2020, SZC approved the sale of 18.8 ha to Industrial Urban Development Joint Stock

Company No.2 (HSX: D2D). We estimate that this transfer will bring VND266bn in net revenue (not

including VND84bn in management fees) in 2021, based on the common leasing price announced by

SZC. In 2021, forecast revenue and NPAT will reach VND535bn (+15% YoY) and VND228bn (+10.6%

YoY).

In near future, SZC's main focus is to develop industrial zone land bank

SZC’s board of directors has approved the policy of mobilizing credit packages from Vietinbank, with a scale of

VND400bn. This is the final disbursement in the total mobilization scale of VND1,200bn to finance the

compensation and land clearance process of 1,556 ha of industrial land. We believe that SZC will use of all of

its resources to complete the land clearance of the industrial park before implementing the urban project

segment.

Revenue in 3Q20 fell by nearly 50% YoY, but cumulative 9M20 still maintained high growth rate.

In 3Q20, SZC recorded a revenue of VND88.5bn and NPAT was VND37.1bn, down by 49.1% and 43.5%

compared with the same period in 2019. However, in cumulative 9M20, revenue and NPAT growth remained

positive: revenue was VND362.2bn (+27.8% YoY), and EAT was VND162.2bn (+41.3% YoY). Thus, SZC

reached 97% of its revenue plan and exceeded 40% of its 2020 NPAT target.

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29 December 2020

APPENDIX 1

Important Disclosures & Disclaimers

2-Year Rating and Target Price History

Company (Code) Date Rating Target

Price

Analyst Certification

The research analysts who prepared this report (the “Analysts”) are subject to Vietnamese securities regulations. They are neither registered as research analysts in

any other jurisdiction nor subject to the laws and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately

reflect the personal views of the Analysts primarily responsible for this report. Mirae Asset Securities (Vietnam) LLC (MAS) policy prohibits its Analysts and members

of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board

member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject

companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be

directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of MAS, the Analysts receive compensation that

is determined by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading

and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the

Analyst or MAS except as otherwise stated herein.

Disclaimers

This report is published by Mirae Asset Securities (Vietnam) LLC (MAS), a broker-dealer registered in the Socialist Republic of Vietnam and a member of the Vietnam

Stock Exchanges. Information and opinions contained herein have been compiled in good faith and from sources believed to be reliable, but such information has not

been independently verified and MAS makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness

of the information and opinions contained herein or of any translation into English from the Vietnamese language. In case of an English translation of a report prepared

in the Vietnamese language, the original Vietnamese language report may have been made available to investors in advance of this report.

The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices,

laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject MAS and its affiliates to registration

or licensing requirements in any jurisdiction shall receive or make any use hereof.

This report is for general information purposes only and it is not and shall not be construed as an offer or a solicitation of an offer to effect transactions in any securities

or other financial instruments. The report does not constitute investment advice to any person and such person shall not be treated as a client of MAS by virtue of

receiving this report. This report does not take into account the particular investment objectives, financial situations, or needs of individual clients. The report is not to

be relied upon in substitution for the exercise of independent judgment. Information and opinions contained herein are as of the date hereof and are subject to change

without notice. The price and value of the investments referred to in this report and the income from them may depreciate or appreciate, and investors may incur losses

on investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur. MAS, its affiliates

and their directors, officers, employees and agents do not accept any liability for any loss arising out of the use hereof.

MAS may have issued other reports that are inconsistent with, and reach different conclusions from, the opinions presented in this report. The reports may reflect

different assumptions, views and analytical methods of the analysts who prepared them. MAS may make investment decisions that are inconsistent with the opinions

and views expressed in this research report. MAS, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject

securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in

the open market or otherwise, in each case either as principals or agents. MAS and its affiliates may have had, or may be expecting to enter into, business relationships

with the subject companies to provide investment banking, market-making or other financial services as are permitted under applicable laws and regulations.

No part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of

MAS.

Stock Ratings Industry Ratings

Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving

Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes

Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening

Sell : Relative performance of -10%

Ratings and Target Price History (Share price (─), Target price (▬), Not covered (■), Buy (▲), Trading Buy (■), Hold (●), Sell (◆))

* Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months.

* Although it is not part of the official ratings at Mirae Asset Daewoo Co., Ltd., we may call a trading opportunity in case there is a technical or short-term material development.

* The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings.

* The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.



29 December 2020

Distribution

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19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it

may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is

directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents.

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research reports and the independence of research analysts. This report is distributed in the U.S. by Mirae Asset Securities (USA) Inc., a member of FINRA/SIPC,

to “major U.S. institutional investors” in reliance on the exemption from registration provided by Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934, as

amended. All U.S. persons that receive this document by their acceptance hereof represent and warrant that they are a major U.S. institutional investor and have not

received this report under any express or implied understanding that they will direct commission income to Mirae Asset Daewoo or its affiliates. Any U.S. recipient of

this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Mirae Asset Securities (USA) Inc. Mirae Asset

Securities (USA) Inc. accepts responsibility for the contents of this report in the U.S., subject to the terms hereof, to the extent that it is delivered to a U.S. person other

than a major U.S. institutional investor. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related

financial instruments through Mirae Asset Daewoo. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as

amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements.

Hong Kong: This report is distributed in Hong Kong by Mirae Asset Securities (HK) Limited, which is regulated by the Hong Kong Securities and Futures Commission.

The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the

meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not

be redistributed in whole or in part in Hong Kong to any person.

All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Mirae Asset Daewoo

or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Mirae Asset Daewoo and

its affiliates to any registration or licensing requirement within such jurisdiction.



29 December 2020

Mirae Asset Daewoo International Network

Mirae Asset Daewoo Co., Ltd. (Seoul) Mirae Asset Securities (HK) Ltd. Mirae Asset Securities (UK) Ltd.

Global Equity Sales Team

Mirae Asset Center 1 Building

26 Eulji-ro 5-gil, Jung-gu, Seoul 04539

Korea

Units 8501, 8507-8508, 85/F

International Commerce Centre

1 Austin Road West

Kowloon

Hong Kong

41st Floor, Tower 42

25 Old Broad Street,

London EC2N 1HQ

United Kingdom

Tel: 82-2-3774-2124 Tel: 852-2845-6332 Tel: 44-20-7982-8000

Mirae Asset Securities (USA) Inc. Mirae Asset Wealth Management (USA) Inc. Mirae Asset Wealth Management (Brazil) CCTVM

810 Seventh Avenue, 37th Floor

New York, NY 10019

USA

555 S. Flower Street, Suite 4410,

Los Angeles, California 90071

USA

Rua Funchal, 418, 18th Floor, E-Tower Building Vila

Olimpia

Sao Paulo - SP

04551-060

Brasil

Tel: 1-212-407-1000 Tel: 1-213-262-3807 Tel: 55-11-2789-2100

PT. Mirae Asset Sekuritas Indonesia Mirae Asset Securities (Singapore) Pte. Ltd. Mirae Asset Securities (Vietnam) LLC

Equity Tower Building Lt. 50

Sudirman Central Business District

Jl. Jend. Sudirman, Kav. 52-53 Jakarta Selatan 12190

Indonesia

6 Battery Road, #11-01

Singapore 049909

Republic of Singapore

7F, Saigon Royal Building

91 Pasteur St.

District 1, Ben Nghe Ward, Ho Chi Minh City

Vietnam

Tel: 62-21-515-3281 Tel: 65-6671-9845 Tel: 84-8-3911-0633 (ext.110)

Mirae Asset Securities Mongolia UTsK LLC Mirae Asset Investment Advisory (Beijing) Co., Ltd Beijing Representative Office

#406, Blue Sky Tower, Peace Avenue 17

1 Khoroo, Sukhbaatar District

Ulaanbaatar 14240

Mongolia

2401B, 24th Floor, East Tower, Twin Towers

B12 Jianguomenwai Avenue, Chaoyang District Beijing

100022

China

2401A, 24th Floor, East Tower, Twin Towers

B12 Jianguomenwai Avenue, Chaoyang District Beijing

100022

China

Tel: 976-7011-0806 Tel: 86-10-6567-9699 Tel: 86-10-6567-9699 (ext. 3300)

Shanghai Representative Office Ho Chi Minh Representative Office

38T31, 38F, Shanghai World Financial Center

100 Century Avenue, Pudong New Area Shanghai

200120

China

7F, Saigon Royal Building

91 Pasteur St.

District 1, Ben Nghe Ward, Ho Chi Minh City

Vietnam

Tel: 86-21-5013-6392 Tel: 84-8-3910-7715

december,2020 industrial real estate overweight

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