Optimistic outlook for industrial park real estate stocks

Statistics from Nhadautu.vn show that from the beginning of the year until now (November 17 session), a series of industrial park real estate stocks (IZ real estate) have increased well such as SZC (+80.49%), IDC (+ 71.17%), VGC (57.32%). Besides, many codes in the same group also increased tens of percent such as ITA (+46.42%), TIP (+44.77%), GVR (+43.44%), KBC (+29.96%)

The increasing momentum of the industrial park real estate group is supported by many positive information in recent times. Accordingly, the market report for the third quarter of 2023 published in November by the Ministry of Construction assessed that the demand for industrial park real estate grew positively thanks to the trend of shifting investment capital flows of multinational corporations into Vietnam. Male. FDI data for the first 9 months of 2023 shows that the processing and manufacturing industry continues to lead in attracting FDI with a capital of more than 14 billion USD, accounting for nearly 69.3% of total registered investment capital and an increase of 15.5%. % compared to the same period in 2022.

Not to mention, the remaining space to establish new industrial parks in the North and the South by 2025 is about over 5,000 hectares (according to the Government's national land use plan in Decision 326/QD-TTg) which is also a catalyst. Actively cooperate with the industrial park real estate group. In particular, the provinces that are focused on expansion include Hai Phong, Bac Giang, Thai Nguyen in the North and Dong Nai, Long An, Binh Duong in the South.

Along with that, accelerated construction of transportation infrastructure projects will solve the "logistics" bottleneck and directly support the industrial park real estate industry. Logistics costs in Vietnam account for about 16.8% of the value of goods while this cost in the world is only about 10.6%. Currently, the Government is making efforts to improve transportation infrastructure with a series of public investment projects to help connect interprovincial traffic and shift production to non-central provinces such as the North-South Expressway and ring roads. Ring Road 4 - Hanoi, Ring Road 3 - Ho Chi Minh City, and seaport and airport projects are being planned and implemented.

Although there are many supporting factors, the third quarter of 2023 business results of listed industrial park real estate companies are differentiated.

NDT - Industrial Park Real Estate Ranked first in profit growth in the third quarter of 2023 is Tan Tao Investment and Industry Joint Stock Company (HoSE: ITA). Accordingly, ITA net revenue in the period reached 181 billion VND, an increase of 110.2% over the same period last year. Minus expenses, the company's net profit is 78.2 billion VND, an increase of 224.48%. ITA said the main reason was due to land rental revenue for infrastructure development in Tan Duc Industrial Park from land sublease contracts that arose before 2022.

However, ITA's net profit in the first 9 months of 2023 is only 113 billion VND, down 25% over the same period. ITA explained this decline in results due to the influence of information spreading about the opening of bankruptcy proceedings, even though the company did not receive official service from the court.

Ranked 2nd is Sonadezi Chau Duc Joint Stock Company (HoSE: SZC) with third quarter 2023 revenue of 208 billion VND, up 69% over the same period last year; Net profit of more than 55 billion VND, an increase of more than 136%. Meanwhile, Tin Nghia Industrial Park Development Joint Stock Company (HoSE: TIP) also reported a net profit increase of 69.7% to 69.4 billion VND even though revenue decreased by 59.6%. This result is due to the third quarter of 2023 generating a cooperative profit of 70 billion VND, an increase of 7 times compared to the same period last year.

Behind TIP is Viglacera Corporation - Joint Stock Company (HoSE: VGC) with consolidated after-tax profit increasing by 64% to VND 433 billion.

On the contrary, Kinh Bac Urban Development Corporation - JSC (HoSE: KBC) suddenly reported a sharp decrease in profit for the third quarter of 2023, 99.04% to 18.5 billion VND. Explaining the decline in profits, KBC said it was mainly because during the period the company had not yet had time to hand over land to customers in Nam Son Hap Linh, Quang Chau and Tan Phu Trung Industrial Parks, with a total area of ​​50 hectares as signed. The total value of the signed contract is up to 1,700 billion VND and is expected to be handed over in the fourth quarter of 2024.

Similarly, IDICO Corporation (HNX: IDC) recorded net revenue in the third quarter of 2023 reaching nearly 1,444 billion VND, down 30% over the same period last year. Net profit was only 194 billion VND, down more than 68.3%. IDICO said revenue decreased because industrial park infrastructure lease contracts had not yet met the conditions for recording one-time revenue according to regulations, causing profits to decrease. Besides, partly due to IDC's interest expense increasing by 64% over the same period to nearly 43 billion VND.

Another big name that also reported a decrease in profits is Vietnam Rubber Industry Group - Joint Stock Company (HoSE: GVR). Accordingly, GVR net revenue in the third quarter of 2023 increased by 5.9% over the same period last year to nearly VND 6,200 billion. But because cost of sales increased sharply by 16.3%, gross profit GVR decreased by nearly 22% to VND 1,234.5 billion. Minus expenses and taxes, GVT reported a profit of 493.6 billion VND, down 50.33%.

Many factors support industrial park real estate stocks

BSC Securities Joint Stock Company optimistically evaluates the prospects of the industrial park real estate group in the fourth quarter of 2023 - 2024 based on the fact that Vietnam is still an attractive destination for foreign businesses; Limited supply and high demand are still factors that help industrial park rental prices remain high; and improved transportation infrastructure helps industrial parks far from the central economic region located easier access to FDI capital flows.

For its part, SSI Research reports that the leased area of ​​Vietnam's industrial parks will reach 620 hectares in the first 9 months of 2023, reaching 56% of the yearly plan. SSI Research expects disbursed FDI capital to grow better in 2024, focusing on manufacturing enterprises such as those related to semiconductors and renewable energy.

SSI Research sees a positive increase in demand for industrial park rentals in the North due to the trend of shifting production from China to Vietnam, mainly in the electronics and semiconductor industries. Industrial parks in the South are forecast to recover from low levels in 2023, mainly businesses in the export, logistics, food and beverage production industries. SSI Research estimates that the rental area of ​​industrial parks will increase by 20 - 25% in 2024.

Despite the long-term prospects, BSC believes that the industrial park real estate industry will have to deal with the problem of medical facilities rental prices continuing to increase due to limited new supply. Accordingly, the shortage of industrial park supply comes from the delayed implementation of new industrial parks due to overlapping legal procedures, many obstacles in site clearance, and the mechanism for converting to industrial park land for each type of land. are different, making implementation difficult. Therefore, the average industrial park rental price in 2024 is estimated to continue to increase by 7-8% compared to 2023. However, from another perspective, BSC believes that this is an opportunity for businesses with land funds in hand. Available for large rentals.

Besides, the application of the global minimum tax policy can affect the attraction of foreign investment in Vietnam. However, BSC assesses that the impact will not be much because: Tax incentives are not the leading factor in choosing investment locations for FDI enterprises, the Government is researching other incentives to offset Tax obligations of businesses such as "Support for human resource training costs"; "Developing a plan to deploy monetary supports".

This securities company pays more attention to the increasing level of competition to attract FDI among countries in the region. In the context that ASEAN is emerging as an attractive destination for manufacturers of electronic components and semiconductors, Vietnam also needs to enhance its attractiveness to compete with other competitors in the region. According to JLL, Vietnam is worse than Thailand, Indonesia or Malaysia in terms of infrastructure, labor productivity and business environment. However, FDI capital flows into Vietnam still rank first in the ASEAN region.