Construction contractor Hoa Binh unveils new investment vehicle, says HCMC bourse relisting may take 2 more years

Vietnamese major builder Hoa Binh Construction Group (UPCoM: HBC) plans to establish a new investment holding company to facilitate capital raising as part of its restructuring efforts, while saying its shares may need another two years before returning to the Ho Chi Minh City Stock Exchange (HoSE).

Speaking at the company's 2026 annual general meeting on Friday, executives outlined a series of measures aimed at strengthening liquidity, reducing debt and eliminating accumulated losses of more than VND2 trillion ($76.05 million).

New holding company to attract strategic capital

Board member Nguyen Kinh Luan said Hoa Binh plans to establish Hoa Binh Invest Holdings as an investment vehicle to improve access to funding, ease cash flow pressure, reduce leverage, enhance liquidity and strengthen the company's ability to secure higher-quality construction contracts.

Luan said the new entity would not assume any of Hoa Binh's liabilities or dilute the interests of existing shareholders. All transactions involving the holding company would be conducted transparently and subject to market-based approval procedures.

Under the proposed structure, several major HBC shareholders will transfer 20-30% of the company's outstanding shares into Hoa Binh Invest Holdings.

Backed by capital from domestic and international financial institutions, the new company is expected to become a long-term strategic shareholder of Hoa Binh Construction Group.

Its core asset will be HBC shares, allowing investors to participate in the company's strategic direction while benefiting from returns generated through capital management as well as potential gains from a recovery in HBC's share price after its eventual relisting on HoSE.

Debt swap, receivables recovery to improve cash flow

The company identified liquidity constraints as one of its biggest operational challenges and said it is pursuing several initiatives to strengthen its financial position.

Hoa Binh plans to issue 51.4 million shares at VND10,000 ($0.38) each to swap debt with creditors, increasing its charter capital to nearly VND3.99 trillion ($151.56 million) from over VND3.47 trillion. The new shares will be subject to a one-year lock-up period.

The issuance will be made to 99 creditors that have signed debt-for-equity agreements with the company, including suppliers, subcontractors and manufacturers such as Matec Construction Machinery JSC, Best Quality Construction JSC, and Interhouse Laos JSC.

Vice chairman Le Viet Hieu said outstanding receivables had been reduced to VND2.3 trillion ($87.45 million) from around VND3.5 trillion in 2022. The company aims to recover at least VND1.2 trillion ($45.63 million) of overdue receivables this year.

Through legal proceedings, Hoa Binh has secured enforcement judgments worth roughly VND1.3 trillion ($49.43 million), although it expects to recover only 50-70% of that amount because many project developers have become insolvent, Hieu said.

The company has also obtained confirmation of approximately VND1.7 trillion ($64.64 million) in receivables from completed projects and expects collections from those contracts to further improve liquidity.

In addition, Hoa Binh plans to reduce bank borrowings, restructure debt by extending loan maturities and lower interest expenses. Management said the company has no plans for additional equity issuance after the debt swap to avoid further shareholder dilution.

Targets $9.5 million profit in 2026

Hoa Binh targets consolidated revenue of VND10 trillion ($380.23 million) and net profit of VND250 billion ($9.5 million) this year, implying revenue would more than double from 2025 while earnings remain broadly unchanged.

Hieu said Vietnam's construction sector is supported by several growth drivers, including around VND1,100 trillion ($41.83 billion) in planned public investment, the government's target of completing one million social housing units by 2030, and expected foreign direct investment growth of 10-20%.

However, he also highlighted several headwinds.

Demand in the residential market has weakened as mortgage rates have risen by around 3-4 percentage points, causing the absorption rate of commercial housing projects to fall by roughly half.

Although many projects have entered the tendering stage, developers remain cautious, delaying implementation and limiting new contract awards during the first half of the year.

Meanwhile, geopolitical tensions and higher fuel prices have pushed construction material costs up by 10-30% since the Lunar New Year holiday. Supplies of key materials, including sand, stone and concrete, were also tight for much of the first half before stabilizing only recently.

The construction sector also continues to face labor shortages as demand for workers increases across major projects.

Despite those challenges, Hoa Binh's backlog currently stands at VND15 trillion ($570.34 million), of which VND8.6 trillion is expected to be recognized as revenue this year, providing a solid foundation for achieving its business targets, Hieu said.

HoSE relisting likely to take another two years

Discussing the roadmap for relisting on HoSE, Hieu said Hoa Binh has already met several listing requirements, including positive return on equity and two consecutive years of profit. Outstanding tax and social insurance obligations are also expected to be settled this year.

The main obstacle remains accumulated losses exceeding VND2 trillion ($76.05 million), largely stemming from provisions for doubtful receivables and losses related to subsidiaries with negative equity.

Of that amount, management expects VND1.2 trillion to be recovered this year through receivables collection, asset-for-debt settlements with project owners and court enforcement proceedings.

To fully eliminate accumulated losses, the company also needs to successfully develop several real estate projects, including No Trang Long, Long Thoi social housing and the 1C Ton That Thuyet project.

Hoa Binh had initially targeted September 2026 to erase its accumulated losses entirely. However, based on the pace of its recovery over the past two years, Hieu said the company now expects it will take around two more years before HBC shares can return to HoSE, after outstanding receivables have been collected and its real estate projects are completed.

"If we accelerate debt recovery, improve profit margins and successfully dispose of assets, we could relist sooner," Hieu said. "Our management team's internal objective is to bring HBC shares back to HoSE as early as possible."