Vietnam - Property firms more cautious in business plans

The decline in business results and persistent tough conditions have made property firms become cautious of this year’s business targets by narrowing down their operations to survive instead of expanding like before.

According to annual reports of property enterprises, most firms failed to meet their profit targets last year, and the business targets for this year have declined, including reducing the number of projects to wait for better times.

Sai Gon Thuong Tin Real Estate Joint Stock Co. (Sacomreal) has presented to its shareholders a business plan for the year which focuses more on consolidating the firm rather than focusing on development targets.

Sacomreal’s business results declined strongly last year, with a pre-tax profit of around VND103 billion, equivalent to some 34.5 per cent of the target. The decline partly resulted from the credit tightening policy which made the capital sources restricted, and thus the firm has to extend the implementation progress or stop executing some projects.

This firm also saw a profit drop in the first quarter with only some VND4 billion, down 23 per cent from the same period last year.

Similarly, Dat Xanh Real Estate Service and Construction Corp. (Dat Xanh) last year only obtained half of its revenue target and earned nearly VND34 billion in after-tax profits, falling by half from the previous year and accounting for 42 per cent of the year’s profit target.

Explaining for the profit decline, Dat Xanh said it resulted from many reasons, including the credit tightening. Many projects have fallen behind schedule due to a lack of capital while customers are also in difficulty, and thus the investor has had to reduce the selling price as well as offer incentives to spur the demand.

Quoc Cuong Gia Lai Joint Stock Co. also set the targets of completing its current projects, including the 6B apartment project located on Nguyen Tri Phuong Street in Binh Chanh District, rather than launching new projects.

Consisting of two 30-floor block, this project has had the basic construction and six floors finished. However, the execution of the project has temporarily been stopped due to capital shortage.

Therefore, the developer has proposed to sell this project at a reduced price to the city so that it can be added to the resettlement housing fund.

Besides, Quoc Cuong Gia Lai has been negotiating to sell 50 per cent of the Saigon Plaza project on Le Thanh Ton Street in District 1 to reduce the capital pressure.

The decline in business results has made many other enterprises such as Van Phat Hung, Hoang Quan and Dat Xanh decide not to pay dividends for shareholders, for the reason of using capital for business operations and investments in the coming time.

SaigonTimes

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