Amata VN

Amata VN Plc  

 

Vietnam will benefit from the recent conclusion of the Trans-Pacific Partnership (TPP) which, with other trade agreements, has made Vietnam into a gateway to access 65% of the world’s population and 83% of global GDP. Over the past decade, Vietnam has enjoyed solid FDI growth of 17% CAGR to where it contributes high 67% of export revenue and 54% of GDP. AMATAV will get in on this through subsidiary Amata Vietnam JSC, which has been in the industrial park business in Vietnam for 20 years. We estimate a strong 79% CAGR during 2014-2017F and value AMATAV at Bt10.3/share on DCF. We initiate coverage with a BUY. 

 

The first Thai IP to tap Vietnam’s good economic outlook. AMATAV, a subsidiary of Thailand’s leading industrial park (IP) developer AMATA, is a holding company leveraging off its success in Thailand to get in on Vietnam’s boom in new investment. It has a 50-year grant from Dong Nai Industrial Zone Authority (DIZA) to develop its first IP and a commercial complex on 700 ha (4.4K rai) in Bien Hoa district in Dong Nai province. Its reach will spread further after the recent grant of another 50-year land use rights for a larger 1.3K ha (8.0K rai) in Long Thanh district located astride the new Ho Chi Minh City-Long Thanh-Dau Giay expressway, giving easy access to Ho Chi Minh City and major seaports. It will develop a premium IP – Amata City High Tech – on 410.3 ha (2.6K rai), and two commercial complexes – Amata City Service Township on 122.4 ha (765 rai) and Amata City Mega Township on 753.5 ha (4.7K rai) - to serve the fast growing urbanization and logistics demand in the Long Thanh area. 

 

Vietnam: ASEAN’s new tiger economy. One of the biggest factors in Vietnam’s economic growth has been foreign direct investment (FDI) which grew at favorable rate of 17% CAGR during 2004-2014 to where it contributes 67% of export revenue and 54% of GDP. The government targets export growth of at least 10% p.a. during 2016-2030, implying steady FDI growth. The recent conclusion of TPP will make Vietnam even more attractive to investors. All these trade agreements (FTAs, AEC, GSP) has made Vietnam a gateway to access a huge market covering 65% of the world’s population and 83% of the world’s GDP. High FDI growth is waiting in the wings, and with it, demand for industrial properties. 

 

Profit to grow at 79% CAGR from 2014 to 2017F. We estimate YoY profit growth of 198% to Bt369mn in 2015, 29% to Bt475mn in 2016 and 80% to Bt858mn in 2017. We believe the country’s strong FDI will allow a 5% p.a. rise in selling price; this is conservative given the 13% growth for Bien Hoa and 14% for Long Thanh during 2011-1H15. Amata City Bien Hoa and Amata Commercial Complex, are keys to growth for 2015-2016, while a new IP at Amata City High Tech will further raise profit in 2017.  

 

Initiate coverage with a BUY. Our mid-2016 TP is Bt10.3/share using DCF with risk-free-rate assumption of 4.5%, beta of 1.3x and equity risk premium of 6.5%. This implies a PE multiple of 20.3x of 2016, but this comes down materially to 11.2x in 2017 backed by a stronger 3-year CAGR growth outlook of 79%. Further upside to our TP is hiving off its ready-built factories and a weaker baht. We like it for its excellent growth outlook and initiate coverage with a BUY.