Phat Dat Real Estate Development JSC is restructuring its investment portfolio to support the company's sustainable growth target.
The Ho Chi Minh City-based developer’s restructuring is going hand in hand with its positive leverage ratio, balanced profitability, and stable annual cash flow.
Astral City project transfer to boost cash flow
Phat Dat recently decided to transfer Astral City, one of its real estate projects in Binh Duong province. The commercial and apartment complex is located on National Highway 13, a vital road in Binh Duong, which borders HCMC.
The deal is expected to bring in VND3,340 billion ($143.64 million) in cash to put the developer close to its 2022 pre-tax profit target of VND3,635 billion ($156.3 million), and improve the cash flow for its growth plan.
Its earnings before interest, taxes, depreciation and amortization (EBITDA) has in recent years been maintained at below 1.7, showing Phat Dat's ability to generate profits. In addition, the "Loan balance/VCHS" index has been kept at a healthy level below 0.6 since 2019.
Expanding land reserves, restructuring business
Currently, the developer holds total land reserves of over 7,404 hectares, including industrial real estate. The business restructuring aims to further improve the company’s resources and competence.
Phat Dat's restructuring would ensure enough land for its development strategy in the next five to 10 years, generating fast cash flow, assuring its profit target. Proceeds from the Astral City project transfer will also help Phat Dat invest in and develop potential projects in HCMC, Binh Duong, Ba Ria-Vung Tau, and Danang.
In HCMC, Phat Dat is in the process of buying stakes in Hoa Binh Real Estate JSC, which owns several land sites downtown.
Vast products in pipeline for 2022, 2023
In 2022 alone, Phat Dat plans to introduce to the market more than 12,000 housing products with an estimated combined value of VND32,000 billion (almost $1.38 billion) with about VND12,000 billion from Ba Ria-Vung Tau, VND17,000 billion from Binh Duong, and roughly VND3,000 billion from Binh Dinh province in the south-central region. The company’s pre-tax profit target this year is VND3,635 billion ($156 million).
For 2023, Phat Dat expects a higher total of introduced housing products than this year, eyeing a pre-tax profit of VND5,700 billion (more than $245 million).
In its plans for the 2019–2023 period, the corporation expects its total accumulated pre-tax profit to reach VND14,270 billion ($613.7 million). The results in 2019, 2020, and 2021 were VND1,105 billion, VND1,539 billion, and VND2,344 billion, respectively.
The developer’s current healthy financial indicators show its business restructuring strategy will be able to maintain its sustainable growth.