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Vietnam Real Estate Market News

Vietnam Business » Vietnam Real Estate Market News » Cooling market impacts property companies

Cooling market impacts property companies

Thu Duc Housing Development Joint Stock Company (TDH), for instance, said it has set itself a revenue target of VND709.23 billion (US$37.3 million) and net profit target of VND223.23 billion ($11.7 million) this year. But in the first six months turnover was a mere VND118.6 billion, or 17 per cent of the target, while profit was VND99.4 billion, or 46 per cent.

The first-half report cards of property companies make for sorry reading as the commercial real-estate market, hit hard in the last two years by the recession, remained depressed.

Significantly, VND69.27 billion of its anaemic turnover was from financial services, meaning its core real-estate business showed no signs of improvement.

De Tam Joint Stock Company is in a similar situation. Its revenue target is VND108 billion but it achieved just 41.5 per cent of this in the first half.

Its net profit figure was even lower at 32.7 per cent.

But Le Anh Thi of the Au Viet Securities Joint Stock Company said despite this many real estate companies hope to achieve their yearly target since they hope for a dramatic improvement in the next few months.

Earlier this week the central bank showed signs of loosening monetary policy to support economic activity so that the targeted 6.5 per cent gross domestic product growth is achieved.

This is likely to see more bank funds flow into the real-estate market, helping revive it, Thi said.

Raising capital

According to insiders, property firms are always in need of funds for their projects while banks are not ready to oblige.

Major firms are choosing the stock market route to raise funds.

The Land and Housing Development Joint Stock Company (Cotecland) plans to raise its charter capital from VND21.5 billion ($1.13 million) to VND150 billion ($7.9 million) by issuing shares. Proceeds of the issue, at a reference price of VND42,000 on the HCM City Securities Market, will be used to develop 15 projects.

Pham Thi Kim Xuan, general director of De Tam Joint Stock Company, said her company listed its shares on the stock market on July 16 and plans to make a fresh issue to double its capital to VND200 billion.

The funds raised through the issue will be used for building the Dataco new urban area in Nhon Trach District, Dong Nai Province; Detaco Phu Quoc villa village in Phu Quoc; and Detaco Tan Phu commercial complex in HCM City.

Thu Duc plans to issue six million convertible bonds at a face value of VND100,000 each.

The money from this issuance will be used for some major projects in HCM City like the Binh Khanh resettlement area, Cantavil Thu Thiem Apartment, and Phuoc Long residential building.

Analysts warned, however, that since the companies are diluting their equity, if their projects are not developed effectively and on schedule, earnings per share will drop.

Vietnam Business And Financial News Network. Source [english.vietnamnet.vn]

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