Three one-off incomes drive profit

According to its consolidated financial statements for the third quarter of 2026, Khang Dien House (HoSE: KDH) reported net revenue of VND41.4 billion ($1.6 million) and gross profit of VND6 billion ($232,753), down sharply from VND1.1 trillion and VND776 billion, respectively, in the same period last year. Its after-tax profit fell 68% year-on-year.

For the first nine months, the firm’s net revenue reached VND483.4 billion ($18.75 million), down 83% year-on-year. Its gross profit stood at VND270 billion ($10.47 million), down 82% and insufficient to cover operating expenses.

Despite the decline, Khang Dien reported after-tax profit of nearly VND1.27 trillion ($49.27 million) for the nine-month period, up 50.9% from a year earlier.

The main drivers were three unusual incomes: financial income of VND916 billion ($35.53 million), sharply higher than VND28.7 billion in the same period last year; a VND132.7 billion share of profit from associates; and other profit of VND382 billion.

During the period, the company recorded a gain of nearly VND896 billion ($34.76 million) related to the transfer of its stake in New Binh Trung, a company also based in HCMC.

Specifically, on June 23, 2026, it completed the transfer of a 2% stake in New Binh Trung for a total consideration of VND68.3 billion ($2.66 million), generating a direct gain of VND21.6 billion. The remaining VND874.4 billion was an accounting entry.

The sale of the 2% stake reduced Khang Dien’s ownership in New Binh Trung from 50.95% to 48.95%, resulting in the company being reclassified from a subsidiary to an associate.

Consequently, a gain of VND874.7 billion ($33.94 million), which the company had previously recorded directly in undistributed after-tax earnings on its consolidated balance sheet in connection with a 2023 stake sale, was transferred to the income statement in the 2026 reporting period.

As a result, most of the nearly VND896 billion ($34.76 million) gain did not come from property sales or a corresponding new cash inflow during the period. Instead, it stemmed from the accounting recognition of an equity transaction completed earlier.

Following its reclassification as an associate, New Binh Trung continued to contribute to Khang Dien's business results through the VND132.7 billion ($5.15 million) share of profit from associates recorded in the third quarter.

Separately, Khang Dien House reported other profit of VND382 billion ($14.82 million), a significant improvement from a loss of VND7.4 billion in the same period last year. The main contributions were a VND285 billion bargain purchase gain from An Lap Real Estate Development JSC and VND129.4 billion in compensation for contract termination.

In March 2026, the company acquired a 99% stake in An Lap for over VND2.55 trillion ($99.05 million), while its net asset value stood at VND2.87 trillion. The transaction generated a bargain purchase gain of VND285 billion ($11.1 million) for Khang Dien.

According to Khang Dien, An Lap is the developer of an 8.2-hectare residential project in HCMC’s Cat Lai ward, near its existing Gladia and Binh Trung Dong projects.

The acquisition has expanded the firm's legally completed land bank in the Binh Trung and Cat Lai wards to nearly 40 hectares. The company estimates total investment in the entire urban development, including Gladia, Binh Trung Dong and the new project, at nearly VND40 trillion ($1.55 billion), with an expected contribution of around VND10 trillion in profit over 2025-2030.

Who acquired the 2% stake in New Binh Trung?

New Binh Trung was established in 2023 with charter capital of VND3.39 trillion ($132 million). Binh Trung Real Estate Business and Investment Company Limited, a subsidiary of Khang Dien House, contributed 99.9% of the capital. The firm made its contribution in the form of land-use rights to a project in HCMC’s Binh Trung Dong ward, formerly part of Thu Duc city.

Shortly after its establishment, in July 2023, Khang Dien transferred a 49% stake in New Binh Trung to a corporate partner for total consideration of over VND1.66 trillion ($64.4 million). The resulting gain of VND874.7 billion was recorded under undistributed after-tax earnings on the group's consolidated balance sheet for that year.

Before the 2% stake transfer in June 2026, New Binh Trung's shareholder structure comprised Binh Trung Real Estate Business and Investment Company Limited, with a 51% stake, and VN Success Pte. Ltd, with 49%.

Following the transaction, the ownership structure changed, with Binh Trung Real Estate Business and Investment Company Limited holding 49%, VN Success Pte. Ltd 49%, and individual investor Nguyen Tuan Thanh the remaining 2%. Thanh, born in 1981, currently serves as a department head at a subsidiary with 99.9% of charter capital held by Khang Dien.

In August 2026, the legal entity holding the 49% stake in New Binh Trung was changed from Binh Trung Real Estate Business and Investment Company Limited to Phuoc Nguyen Real Estate Investment JSC, an indirectly owned subsidiary of Khang Dien.

Inventory and borrowing rise amid broader market challenges

Alongside its business performance, Khang Dien’s asset and capital structure also underwent notable changes. Total assets stood at VND43.31 trillion ($1.68 billion) at the end of the third quarter, up 27% from the beginning of the year.

Inventories rose from VND23.26 trillion to more than VND29.91 trillion ($1.16 billion), mainly due to the recognition of VND5.57 trillion in work-in-progress real estate at the An Lap - Binh Trung Dong project. Cash and cash equivalents also increased significantly, from VND2.54 trillion to VND6.2 trillion ($240.55 million).

On the liabilities side, total borrowings climbed 75% from the beginning of the year to VND17.78 trillion ($689.84 million). Against a backdrop of rising interest rates, the company's financing costs also increased considerably.

In the first nine months, Khang Dien capitalized VND822 billion ($31.89 million) in borrowing costs into inventories, exceeding the VND801 billion recorded for the whole of 2025. The company also recognized VND37.3 billion ($1.45 million) in interest expenses in its income statement, compared with no such expense in the same period last year.

Capitalizing borrowing costs allows the company to avoid recognizing the entire expense in its income statement during the period. Instead, the costs are added to inventory values and allocated to cost of goods sold when the related property products are recognized as revenue, subject to the applicable accounting requirements.

On a more positive note, short-term advances from customers reached over VND1.864 trillion ($72.32 million) at the end of September, up VND1.465 trillion from the end of the second quarter and VND1.216 trillion from the beginning of the year.

These amounts primarily represent payments made by customers in accordance with the contractual schedules for property purchases across the group's projects. Khang Dien reportedly only resumed new sales activities in early August, when it partnered with Singapore-based conglomerate Keppel to launch Gladia Heights, a riverside apartment development in HCMC.

Customer advances are a positive indicator for sales activity, but have not yet been recognized as revenue for the period. Their conversion into revenue and profit will depend on project execution, product handovers and the applicable revenue recognition requirements.

On the stock market, KDH has fallen sharply from around VND33,000 to VND13,250 ($0.51) per share over the past year, a decline of about 60%, breaking below their late-2022 low.