REAL ESTATE STOCKS AWAIT CASH FLOW

Domestic and foreign capital flow is expected to bolster real estate shares after the COVID-19 pandemic as many investors are paying attention to the industry.

Việt Nam Construction and Import-Export Joint Stock Corporation (VCG) soared more than 50 per cent in the past two months, largely because the enterprise has entered a period of stable governance, thereby focusing heavily on investment and trading activities, VCG said.

Nearly 95 per cent of the VCG shares are in the hands of large investors who hold corporate governance and the number of shares circulating outside is very low, accounting for less than 5 per cent.

At a previous general meeting of shareholders of Vinaconex, chairman of the company Đào Ngọc Thanh said VCG’s shareholders will benefit if VCG's shares top VNĐ50,000 per share (US$2.16). He suggested VCG buy back shares then put them up for sale when prices increase.

Businesses that recorded positive growth in the second quarter also attracted investors' attention.

In the second quarter, Novaland (NVL)'s profit increased by 73 per cent year-on-year. Its key resort real estate projects include Aqua City and Novaworld Hồ Tràm.

Khang Điền House Trading and Investment JSC (KDH)’s profit rose 125 per cent with a focus on developing small and medium housing with high liquidity.

Phát Đạt Real Estate Development JSC (PDR)’s profit increased by 37 per cent over the same period last year.

The market is also flooded with information that is set to spur real estate stocks such as Vingroup acquiring ITA to own an industrial real estate land fund, shares of Kinh Bắc City Development Share Holding Corporation (KBC) being purchased by a group of investors, Long An-Long Hậu Industrial Park in southern Long An Province (LHG) holding a large amount of money after shareholders divesting from the manufacturing sector and pouring into real estate projects and leaders of LDG Joint Stock Company (LDG) buying back LDG shares.

The real estate industry's second-quarter revenue exceeded VNĐ36 trillion, down 24.4 per cent over the same period last year. Profit after tax was reported at VNĐ7.1 trillion, down 47.7 per cent year-on-year.

The distribution of net profit growth of the whole industry in Q2 was equivalent to that in the first quarter. Stocks reporting negative profit growth accounted for 58 per cent. Of them, 45 per cent of businesses recorded profits decreasing by more than 20 per cent.

The industry's ability to pay interest rates improved from a low level in the first quarter, up 4.3 per cent.

The quiet real estate market due to the pandemic harmed the launching plans of real estate projects, affecting inventory settlement.

The decline in business results caused the return on average assets (ROAA) and return on average equity (ROAE) to decline to 16.3 per cent and 6.6 per cent, respectively.

In the second quarter, post-tax profits of real estate giants Vinhomes (VHM) and Vincom Retail (VRE) declined respectively 55 per cent and 46 per cent year-on-year.

For VHM, this was due to the decline in real estate transferring activities.

Meanwhile, Vincom Retail (VRE) had to set aside a support package worth VNĐ375 billion for clients affected by COVID-19. The interest payments for the issuance of more than VNĐ1 trillion of bonds in April also eroded the profit of the company.

Companies that have a large house fund to hand over in the second half of 2020 include Novaland, Hoàng Huy Finance, Nam Long, Bamboo Capital, Hà Đô and CEO Group.

Insiders said that if in the fourth quarter the progress of the handover of houses slows, the growth of business results in 2020 of some listed companies could become negative.

In 2019, total revenue and post-tax profit of businesses reached VNĐ219.4 trillion and VNĐ21.1 trillion, respectively, up 5.3 per cent and 27.3 per cent compared to the previous year.

Source: VNS