Construction giant Coteccons reports $1 mln Q2 loss

Coteccons, Vietnam's leading private construction company, suffered a loss of VND23.8 billion ($1.02 million) in the second quarter of this year, against a $1.92 million profit in the same period last year.

It earned net revenues of VND3,280 billion ($140.5 million) in the period, up 28.6% year-on-year.

The provision for bad debts from 2018 to 2020 which Coteccons called "past burdens", along with the current difficulties in the real estate and construction sector, exerted great pressure on the company's Q2 profit margins, according to its financial statement.

One of the projects the company has to make the heaviest provision for is Viet Star Holdings - a member company of property developer Tan Hoang Minh Group. The project had been handed over and put into use since 2019 and despite efforts to recover payments, Coteccons had bad debt provision of VND242 billion ($10.36 million) for it, raising the accumulated provision for 2020-Q2/2022 to VND484 billion ($20.74 million).

In the first half of the year, Coteccons's net revenue and after-tax profit reached VND5,193 billion ($222.4 million) and VND5.4 billion ($231,200), almost flat and down 18 times compared to the same period last year, respectively.

After six months, Coteccons has fullfilled 34.6% of the year’s revenue plan and 25% of the year's profit target.

At the end of Q2, the company's total assets were valued at VND16,456 billion, up 9% compared to the beginning of the year. Liabilities reached VND8,258 billion ($353.6 million), up 21%.

The "past burdens" that have persisted for many years, the central bank's tightening of credit for the real estate sector, the corporate bond market tightened following the cancellation of nine Tan Hoang Minh bond issuances over "untrue information disclosure", supply chain disruptions, geopolitical conflicts, rising input materials and a shortage of laborers due to the lingering effects of the pandemic were listed as factors that impacted Coteccons' profits.

In the first half, the company won bids for 39 projects with a total construction value of more than VND16,000 billion ($685.52 million).

In Q2 alone, the company won construction contracts of many iconic projects like Diamond Crown Hai Phong, Novaworld Phan Thiet project, and a contract of the Ecopark urban area in Hanoi worth nearly VND2,400 billion ($102.83 million).

On the Ho Chi Minh City Stock Exchange, the CTD share price hit VND60,300 ($2.58) at the closing session on July 29.