'Tunnel king' Deo Ca makes five-year roadmap for listing, double capital base by 2025

Deo Ca Group JSC, also known as the “tunnel king” for its leading position in Vietnam’s transport construction sector, has devised a five-year roadmap for going public and will proceed at an appropriate time, said an executive.

The last two to three years have not been favorable for businesses, especially transport construction firms, due to the impacts of Covid-19, high interest rates, and the rising costs of materials, said Deo Ca’s vice chairman Nguyen Huu Hung at its AGM on Wednesday.

Speaking of its orientations, Hung said that the firm intends to invest VND80 trillion ($3.14 billion) in various projects, including the Tan Phu-Bao Loc expressway in the Central Highlands province of Lam Dong, the Ho Chi Minh City-Chon Thanh expressway in the south, Belt road No.4 along the southern province of Binh Duong, and the second-phase HCMC-Trung Luong-My Thuan expressway in the south.

It will also appraise the Vung Ang-Mu Gia section of the Vietnam-Laos railway project in the central region, with an estimated cost of VND47.6 trillion ($1.87 billion).

In addition, the corporation will continue its work on the VND20.4 trillion ($801 million) Quang Ngai-Hoai Nhon expressway in the central region, part of the second-phase North-South expressway. It will spend VND15 trillion ($589.01 million) on other expressway projects, two roads to Long Thanh international airport in the south, the Khe Net tunnel for the Hanoi-HCMC railway, and others.

To fund these projects, Deo Ca plans to issue 210 million new shares to raise its charter capital by 50% over 2024-2025 to VND6.3 trillion ($247.74 million). The group has diversified its capital sources, including equity, loans, business partnerships, and bonds, to finance nearly 400 kilometers of expressways and railways, Hung stated.

Regarding business goals, the company is aiming for VND8.95 trillion ($351.68 million) in consolidated revenue and VND733 billion ($28.78 million) in consolidated net profit in 2024, up 35% and 14% year-on-year, respectively. In the first quarter of this year, the respective figures stood at VND1.75 trillion ($6.87 million) and VND169 billion ($6.64 million), up 122% and 40% year-on-year.

It intends to allocate VND168 billion ($6.6 million) to pay a cash dividend of VND400 a share, this year.

Currently, Deo Ca is working on the first-stage VND8.9 trillion ($561.52 million) Dong Dang-Tra Linh expressway, which started construction in January, and the VND11 trillion ($431.94 million) Huu Nghi-Chi Lang expressway project, which was kicked off in April.

The firm is in charge of operating and maintaining over 410 km of expressways and highways, over 30km of road tunnels, and manages 18 build-operate-transfer (BOT) toll booths.

In 2023, it posted VND6.62 trillion ($260.03 million) in consolidated revenue and VND642 billion ($25.21 million) in net profit, up 51% and 53% year-on-year, respectively.

During the year, it completed many projects on schedule, such as the Thung Thi tunnel on the Mai Son-National Highway No.45 expressway section in the central region, My Thuan 2 bridge, My Thuan-Can Tho expressway in the south, and the expansion of Prenn pass (Lam Dong province), with a total contributed capital of VND6.1 trillion ($239.53 million).