Secret behind high pre-IPO evaluation of Metro Star shares

Early action and thorough preparation in applying a unique business model have resulted in a high pre-IPO international valuation of the Metro Star real estate firm at $5.3 per share.

According to the audited financial statements of EY, Metro Star Investment Company Limited is a rare case in Vietnam of a real estate business not having any outstanding debt or bond debt.

Metro Star’s business model features a series of housing projects in combination with major stations of six to-be-built metro projects in Ho Chi Minh City.

As soon as HCMC drafted a plan for six metro lines in 2003, the firm researched the Transit Oriented Development (TOD) model and now, the Green TOD model.

As the first firm to develop Green TOD projects alongside metro lines, Metro Star has accumulated massive advantages in attracting green investments that are expected to roll into Vietnam in 2024, also the year designated for Metro Star’s initial public offering (IPO).

Highly rated

The Green TOD model enhances connectivity and utilization of transport modes like the metro along with green constructions and clean energy. It is an advanced model that positively serves Ho Chi Minh City’s response to climate change adaptation and implementation of a net-zero emissions strategy.

Thus, Metro Star projects will lead to higher use of green public transportation forms like the metro and an expected 50% reduction in use of cars and motorbikes, which is equivalent to 10,000 motorbikes and 100 cars per project.

It is also expected that dozens of Metro Star projects alongside the six to-be-built metro lines will lead to successes similar to that of Green TOD models in Japan, Hong Kong and Singapore, where the proximity to public transportation is a key factor in property evaluation.

The closer the distance to the public transportation station is, the higher the property evaluation is. This is a reason behind the high ratings that the Metro Star’s Green TOD model gains from the international community.

In addition to such advantages, the company is developing modern, green houses per international standards with hundreds of Industry 4.0 innovations. These create optimally green living spaces that fulfil homeowners’ aspirations and match the global trend of targeting net-zero carbon emissions.

18 years in the making

The results achieved by the company are a result of painstaking, thorough preparations over 18 years.

At the moment, Metro Star’s charter capital is VND1.2 trillion ($49.07 million) while its total assets are valued at VND7,985 billion ($326.52 million).

Over the last 18 years, Metro Star has grown significantly in terms of project scale, revenue, profit and returns for customers. Its portfolio grew from 6,000 square meters in 2014 to 18,000 square meters in 2016 and 252,000 square meters in 2023.

The company expects its revenues to rise from VND600 billion ($24.6 million) in 2017 to VND6 trillion ($246 million) in 2024 and up to VND23 trillion ($943.1 million) in 2027. Its profits are expected to increase from VND300 billion in 2017 to VND3 trillion in 2024 and VND9 trillion ($369 million) in 2027.

Given the rare advantages that it boasts in the realty sector, Metro Star’s projected values are still modest. Investors have reaped handsome gains including profits of 100% for investors in its Metro Star project and 300% in its I-Home project.

The completion of six metro projects in HCMC is expected to multiply the value of nearby property projects. International realtor CBRE has granted “perfect” scores for the firm’s projects including Metro Star and Metro City, thanks to their prime locations and top prospects that will ensure long-term growth for the company.

These are factors behind the high valuation of VND133,000 ($5.3) per share by international valuation agency Grant Thornton even as the firm prepares to conduct an IPO next year to become a joint stock company.

Metro Star Investment Co., Ltd

Hotline: 090 789 6565

Address: 360 Vo Nguyen Giap avenue, Phuoc Long A ward, Thu Duc city, Ho Chi Minh City