Construction giant Coteccons fails to hit 2022 revenue target

Leading Vietnamese private construction company Coteccons reported a 2022 revenue of VND14.5 trillion ($618.7 million), up 60% year-on-year and reaching 97% of its annual target.

At a meeting with investors on Monday, Coteccons CEO Vo Hoang Lam did not announce his company's 2022 profit details, just saying profits were "up to expectations".

He said in 2022 the company had been working on 65 projects across the country, including the Lego Group plant in Binh Duong province, the Diamond Crown project in Hai Phong City, and a VinFast factory.

"We have set cautious targets for 2023 given our backlog. We plan an increase of 10-20% over our 2022 plan," he said.

For 2022, Coteccons set a revenue target of VND15.01 trillion ($640.5 million), up 65% over 2021, and expected after-tax profit of VND20 billion ($853,400), down 17%. Regarding the drop, Bolat Duisenov, former chairman of Coteccons, had said that the main reason was the company had to make provisions.

Duisenov added if it had not made provisions for property developer Tan Hoang Minh Group's projects, Coteccons would have been able to post a better performance.

In August, Coteccons secured a contract to build a modern toy making facility in Binh Duong for Lego Group in which the Danish giant is investing more than $1 billion.

Earlier in the same month, the company announced the appointment of Vo Hoang Lam as its new CEO after leaving the position vacant for 18 months.

On the Ho Chi Minh City Stock Exchange, the CTD share price hit VND37,850 ($1.62) on Tuesday.

According to a construction industry outlook report by Vietcombank Securities (VCBS), construction of residential projects in 2023 is forecast at low levels for construction companies, including leading ones like Coteccons, Hoa Binh, Ricons, and Newtecons,

In 2023, real estate businesses face great pressure from corporate bond maturity and the sale and transfer of projects are also at a disadvantage due to the low market liquidity. Therefore, the investors may have a shortfall in cash flow, affecting the ability and schedule of payments to contractors.

VCBS assesses that the difficulty in debt collection will greatly affect the financial position and liquidity of construction companies as most contractors have to use loans to finance construction activities.