KinhBac City Group is a major player in the Vietnamese real estate market and is listed on the Ho Chi Minh Stock Exchange under the ticker KBC. It specialises in industrial parks, urban areas, hotels, and commercial centres. KBC holds a substantial land portfolio in strategic economic zones across the country, totaling 8,141 hectares.
KBC reported strong growth in 2023, with revenue and profit after tax soaring by 319 percent and 42.4 percent respectively compared to the previous year. This surge was fueled by an 8-fold increase in revenue from long-term land and infrastructure leasing, which accounted for about 89 percent of KBC’s revenue.
Specifically, KBC recognized US$21.64 million of one-time rental revenue-companies in Vietnam are allowed to recognize up to 90 percent of the total value of a lease when the lease begins. However, it is subject to conditions like it needs to be a non-cancelable lease.
There was, however, a decline in new leases for the company in the first half of 2024, with only 15 hectares of land handed over as opposed to 128 hectares in 2023. As a result, KBC recorded a decrease in revenue and net profit of 78.2 percent and 90.53 percent year over year, respectively.
In March, KBC’s management board said it anticipated receiving investment approval for two projects by June 2024, namely the Trang Due 3 Industrial Park and Trang Cat Urban Area in Hai Phong City. This would have given the firm’s bottom line a significant boost. However, this did not come through with a report by SSI Research released on August 8, suggesting that the Trang Due 3 Industrial Park was unlikely to be completed this year. KBC was, therefore, unlikely to hit its target for the year.
Notably, the stock price has fallen about 19.3 percent since the beginning of 2024 to September 12.
Disclosure: The author does not have any financial interest in KBC stock.