According to a recent update report on KBC JSC (stock code: KBC), SSI Research stated that one of Kinh Bac’s key projects, Trang Due 3 Industrial Park, is in the final stage of investment approval. SSI Research expects this industrial park to receive approval in the first half of 2024. From there, the company can lease 50 hectares of industrial land in Trang Due 3.
However, SSI Research believes that due to difficulties in the investment approval process for a large project like Trang Due 3, which may only receive final approval in 2024, its contribution to Kinh Bac City’s business results will only be seen from 2025.
Meanwhile, MBS Research assessed that the land fund of Trang Due 3 Industrial Park will be sufficient for Kinh Bac City to lease for about 5 more years. The commercial area is estimated at about 200 hectares based on the compensated area in the current industrial park.
Notably, MBS Research also mentioned that Kinh Bac City has signed a memorandum of understanding (MOU) to lease more than 100 hectares of land in Trang Due 3 Industrial Park. LG Display is expected to lease 80 hectares at a rental rate of 130 – 140 USD/sqm. Based on current market conditions, MBS Research projected that Trang Due 3 Industrial Park will be able to lease approximately 50 hectares of land per year, with an average revenue of VND 1,900 – 2,300 billion in the next 3 years.
In mid-November 2023, the Trang Due 3 Industrial Park project was approved for a 1/2,000 scale master plan adjustment with a scale of 687 hectares, nearly double the total area of Trang Due 1 and 2 Industrial Parks.
Currently, the project is awaiting the Prime Minister’s approval for investment policy. Many financial institutions assessed that this industrial park will soon receive approval in the context of Hai Phong city’s “urgent” need for industrial land to meet the expansion of production and business activities of domestic and foreign enterprises.
Trang Due 3 Industrial Park Project.
TRANG CAT URBAN AREA IS EXPECTED TO GET INVESTMENT APPROVAL BY THE END OF 2024
Another important project and a mid-term growth driver for Kinh Bac City is the Trang Cat urban area project in Hai Phong. According to MBS Research, this project covers an area of 585 hectares, with a commercial area of 282 hectares and an expected total investment of about VND 11,329 billion. As of Q1/2024, Kinh Bac City has cleared about 100 hectares of land in this project. At the same time, the company’s investment value poured into this project is VND 8,243 billion, mainly for land use and site clearance costs.
In terms of legal procedures, the project has been approved for a 1/500 planning adjustment and is in the process of completing the remaining legal procedures to obtain a construction permit and open the project.
SSI Research expects Kinh Bac City to receive amended investment approval in 2024 and complete the payment obligation for land use rights for the additional commercial area in 2025. Subsequently, Kinh Bac will open sales for the project in the second half of 2025 and start recognizing revenue in 2026.
Sketch of Trang Cat Urban Area
The Trang Cat urban area project was approved in terms of master planning by the Hai Phong People’s Committee in 2010, with a total land area of nearly 585 hectares. In 2012, the project was approved for investment by Trang Cat Urban Development Company (100% owned by Kinh Bac). However, the project was delayed until 2021 when it received investment approval from the Hai Phong People’s Committee. By the end of 2022, KBC had been handed over nearly 582 hectares out of the total 585 hectares of project land by the Hai Phong People’s Committee, and KBC had also completed the land use rights payment. In 2023, the Prime Minister approved the master plan for Hai Phong city, which included an adjustment to increase the commercial land area of the Trang Cat urban area project.
According to Kinh Bac City’s 2023 annual report, the commercial land area of the project is 282.14 hectares, an increase of about 70 hectares compared to the previous plan. With more commercial land, the company needs to pay additional land use rights costs for the increased commercial land area and apply for investment certificate adjustments for the project.
OTHER PROJECTS OF KINH BAC CITY
According to MBS Research, Nam Son Hap Linh Industrial Park in Bac Ninh province has an occupancy rate of nearly 50% after just 3 years of operation, with rental rates reaching 140-150 USD/sqm. In Bac Ninh, there is not much land left for industrial park development (over 90% occupancy rate), while the demand from investors, especially those from South Korea, continues to increase.
Therefore, MBS Research expects the project to be fully occupied within 4-5 years, with rental rates growing by 7% (in line with the rate in Bac Ninh province in 2023). The annual leased area is expected to be 25 hectares, with revenue and profit in 2024 projected to reach VND 989 billion and VND 443 billion, respectively.
Quang Chau Expanded Industrial Park has an area of 90 hectares, with a commercial land area of 67.4 hectares. In 2023, the project recorded revenue of about VND 2,000 billion for 51.71 hectares. The remaining area has been leased, and the company will recognize revenue in 2024, estimated at VND 546 billion, with a profit of VND 286 billion and an LNST margin of over 50%. The project is expected to be fully occupied after 2 years of operation.
Finally, Tan Phu Trung Industrial Park in Ho Chi Minh City – a broad and dynamic consumer market in the country, with an easy labor recruitment process and good land rental rates – has about 100 hectares of commercial land remaining, with high rental rates of 190 USD/sqm. MBS Research believes that industrial land rental rates in Ho Chi Minh City will grow by 5% per year, lower than the national average, due to higher costs of renting premises and services compared to neighboring provinces, which is a hindrance to businesses investing here. In 2024, we expect a leased area of 25 hectares, a rental rate of 200 USD/sqm, and revenue of about VND 1,272 billion (up 64% over the same period).
