SZC – Guidance for single-digit NPAT growth in 2024G; new anchor tenants to drive IP land demand – AGM Note

• We attended SZC’s annual general meeting (AGM) on April 5, 2024. 
• Shareholders approved 2024G guidance for total income (including net revenue, financial income, and other income) of VND881bn (USD36mn; +5% YoY) and NPAT-MI of VND228bn (USD9.4mn; +4% YoY), which represents 91% and 75% of our respective forecasts. SZC completed 184%/107%/104% of its respective 2021/22/23 NPAT-MI guidance.
• Shareholders approved the company’s FY2023 and FY2024 dividend plans at 10% on par value for each year and did not specify if this would be a cash or stock dividend. We currently assume no cash dividend during the forecast period. 
• Shareholders approved 2024G disbursement plan for land compensation at VND1.1tn (USD45mn; +184% YoY). We attribute the significant increase in the capital spending guidance to the completed rights issue in Q1 2024 with proceeds of VND1.2tn (USD49mn). In addition, SZC achieved strong IP land sales in 2023 at ~67 ha (compared to 2023 guidance of 40 ha and 2022 IP land sales of 40 ha).
• Shareholders approved the plan for allocation to the I&D fund of 19.5% and 23.6% of SZC’s 2023 and 2024 NPAT, respectively. Among which, the allocation to the bonus & welfare fund in 2023/24 is 5.8% and 13.1%, respectively.  

Resilient land sales to be supported by new anchor tenants. Management stated during SZC’s AGM that the company has recently signed an MOU with Electronic Tripod for a land plot of ~18 ha in the Sonadezi Chau Duc IP. Tripod received an investment license in March 2024 from  Ba Ria – Vung Tau Province to invest in a USD250mn factory at the Chau Duc IP. In addition, per SZC, Tripod could potentially increase its investment scale in subsequent phases to ~100 ha, along with the involvement of Tripod's potential suppliers, which should support further demand outlook in SZC’s IP. We currently project SZC’s IP land sales in 2024/25F of 50 ha/55 ha, respectively, compared to the ~67 ha of MOU and signed contracts land sales achieved in 2023.

Residential sales remain low. Per management, at the Huu Phuoc residential project (adjacent to the Chau Duc IP), SZC mostly presold the shophouse phase 1 of ~75 units, while the phase 2 of ~63 shophouse units currently has a slow take-up rate. Nevertheless, management anticipates stronger absorption in the long run as infrastructure becomes more developed, such as the construction of the Bien Hoa – Vung Tau expressway.

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