Poor business results cast shadow over Vietnam real estate developers

A slew of Vietnamese property developers have reported poor business performance in the first months of this year despite signs of a recovery in the real estate market.

Development Investment Construction JSC (DIC Corp) suffered a loss of VND117.2 billion ($4.62 million) in Q1 of this year, marking its largest quarterly loss since listing in 2009.

DIC Corp, listed on the Ho Chi Minh Stock Exchange (HoSE) as DIG, posted VND186 billion ($7.34 million) in sales and service revenues in Q1, down 6% year-over-year.

Its net revenue plunged to VND489 million ($19,294) after a significant portion of its products were returned, according to the firm’s consolidated financial statements.

The company's revenue from financial activities dropped to VND12 billion ($473,470) from VND170 billion ($6.71 million) in the quarter because of zero income from investments.

While financial costs fell to VND12.4 billion from VND67 billion ($2.64 million), sales and management costs went up 37% and 72.2% year-over-year, respectively.

LDG Investment JSC (HoSE: LDG) incurred a net loss of VND125 billion ($4.92 million) in Q1, representing the sixth consecutive quarter of loss.

Like DIG, a large number of its products were returned, resulting in negative revenue of VND130 billion ($5.12 million).

Nam Long Investment Corporation (HoSE: NLG), the developer of affordable housing brands Ehome and Ehome S, logged a net loss of VND77 billion ($3.03 million), its first quarterly loss in 10 years and its largest quarterly loss since listing in 2013.

The firm attributed the loss to falling apartment sales and profit from its joint venture with Mizuki compared to the same period last year.

Novaland (HoSE: NVL) recorded a net loss of VND567 billion ($22.31 million) over the three months after escaping losses for two quarters due to exchange rate surges.

The enterprise recorded a sharp increase in loss resulting from exchange rate surges, mounting to VND452 billion ($17.78 million) from VND14 billion. Meanwhile, gross profit, profit from investment cooperation activities, and profit from compensation for breach of contract hiked.

The real estate developer holds substantial loans and bond debt denominated in the greenback. As of March 31, the company held a loan of $72.8 million arranged by Credit Suisse AG, secured by a project in Xuyen Moc district in the southern province of Ba Ria-Vung Tau.

Additionally, it has $300 million of international convertible bonds without warrants and collateral, issued in 2021 and maturing in 2026. Furthermore, the group holds other short-term USD-denominated loans with a third party, totaling more than VND6 trillion ($236 million).

Khang Dien House Trading and Investment JSC (HoSE: KDH) experienced a challenging quarter. It posted VND334 billion ($13.1 million) in revenue, down 21% year-over-year, and VND63.3 billion ($2.48 million) in net profit, down 68%.

This marks the second consecutive quarter in which the company’s profits have fallen below VND100 billion ($3.9 million), a situation rarely observed since 2016.

According to the Vietnam Association of Realtors (VARS), the local property market saw 6,200 transactions in Q1/2024, up 8% from Q4 last year and double that of the same spell in 2023.

Market supply reached 30,511 products in Q1, including 4,626 new units. The absorption rate hit nearly 31%, up five percentage points from Q4/2023 and 19% from the same period last year. The apartment and low-rise housing segments have shown signs of a revival, but the land segment remains gloomy.

The real estate market is expected to stage a better recovery this year, driven by the approval of three critical laws on housing, land, and real estate business; loosened credit policy; and lower lending interest rates, noted MB Securities JSC, listed on the Hanoi Stock Exchange as MBS.

Supply seems likely to remain tight in 2024-2025 as firms wait for guiding documents for the new laws, MBS remarked, expecting benefits for businesses with projects ready for sale and eligible land funds during this period.