The real estate segment is expected to be a profit savior for Vietnam's leading multi-sector corporation REE this year when the first phase of The Light Square project is handed over and its revenue is recorded.
REE leaders expect the real estate segment to make a breakthrough with revenue of VND2,137 billion ($86.24 million) in 2024, double that of 2023, and after-profit tax of VND852 billion ($34.38 million), a year-on-year increase of 52%, becoming the second largest contributor to the group's overall profit.
REE's real estate segment includes office leasing and project development. The company believes that profit from office leasing this year may decrease by 14% year-on-year to VND463 billion ($17.6 million).
The reason is that in the short term, businesses are still under great pressure from cost cutting due to the slow economic recovery. At the same time, the E.town 6 building in Tan Binh district, Ho Chi Minh City will be completed at the end of March, six months later than expected. In the second quarter, the 36,798-square meter building will be put into operation with an occupancy rate of about 30% in the first quarter of operation.
In 2023, REE Land - a subsidiary of REE Corporation, implemented the first phase of The Light Square commercial housing development project in Bo Xuyen ward, Thai Binh town, Thai Binh province. The project could not record revenue and profit in 2023 as planned due to slow construction progress. The company expects to complete the project and record revenue this year.
According to REE, the real estate market has gone through its most difficult period and begun to enter a cycle of stability. However, the market may take another 2-4 quarters to gradually recover. New regulations in the Housing Law and the Law on Real Estate Business passed in November 2023 and especially the revised Land Law adopted on January 18, 2024 will take effect from January 1, 2025, and are expected to contribute to making the real estate market more transparent.
In 2024, REE focuses on developing current projects with all resources to ensure committed progress. In addition to The Light Square, the company will complete work related to site clearance and carry out construction permit procedures for a residential area project in Phu Hoi commune, Nhon Trach district, Dong Nai province.
It will also implement design work and complete construction permit procedures for an office building-commercial work project in Phu Huu ward, Thu Duc city, Ho Chi Minh City.
In addition, REE Land will continue to develop new land funds to pave the way for the development of new projects through participating in auctions for land use rights, bidding for projects using land and M&As of new projects, and prioritizing those with full legal status and favorable locations.
Another business segment with expected profit recovery this year is refrigeration electrical engineering. In 2023, this segment suffered a loss of VND9 billion ($362,200) due to reduced revenue and high receivables.
This year, REE targets this segment’s revenue to increase by 22.3% to VND3,245 billion ($130.95 million) and after-tax profit to VND166 billion ($6.7 million). The firm will carry out the risk assessment process in project implementation, choosing projects with guaranteed capital, legal status, and investor capacity. At the same time, the company will stop construction when investors violate payment obligations and collect debt, especially overdue bad debt.
Meanwhile, the energy segment’s profit is forecast to decrease from VND1,312 billion to VND1,220 billion ($49.23 million) this year due to the impact of the prolonged El Nino phenomenon.
According to the 2024 annual report, the board of directors said REE, listed on the Ho Chi Minh Stock Exchange (HoSE) as REE, has set a revenue target of VND10,588 billion ($427.28 million) with after-tax profit of VND2,409 billion ($97.2 million), up 23.5% and 10% from 2023, respectively.
Closing the Wednesday session, REE stood at VND62,100 ($2.51) per share.