- We initiate coverage of VGC with an OUTPERFORM rating and target price of VND49,800/share. VGC leads the industrial park (IP) market in northern Vietnam with the second-largest leasable land bank (~1,350 ha as of end-Q1 2025) among listed players. Its anchored clients include Samsung, Amkor, Hyosung, Foxconn, and BYD. It is also a top construction materials manufacturer with well-known brand names and dominant market share. VGC holds respective 5%/30%/10%/50% market share in ceramic tiles/building glass/sanitary wares/bricks.
- We expect that ongoing negotiations could narrow Vietnam’s tariff gap with peers to around >5-10%, (base case). While this 5-10% higher tariff may slightly reduce Vietnam’s appeal as an FDI manufacturing destination, it is not sufficient to reverse the country’s longstanding competitive advantages (driven by an ongoing global manufacturing shift to Vietnam supported by FTAs, infrastructure upgrades, and relatively low labor costs). As such, we maintain a positive outlook on Vietnam’s IP leasing sector under this scenario.
- We project a 2024-29F NPAT-MI CAGR of 14%, which is mainly driven by (1) an 18% CAGR in construction materials gross profit (driven by an 11% CAGR in revenue and GPM recovery), and (2) a 6% CAGR in IP land sales & services gross profit (with a 7% revenue CAGR).
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