Vietnam's major builder CII ramps up investment to capitalize on 'golden era' of infrastructure development

Ho Chi Minh City Infrastructure Investment JSC (CII) will pour huge investments into infrastructure projects as it anticipates a “golden era” for the sector during 2025-2035.

Vietnam has continued to assert its growing global position and infrastructure demands become more urgent than ever, according to the HCMC-based company.

At its 2025 AGM held in Ho Chi Minh City on Friday, CEO Le Quoc Binh announced that CII and its partners are advancing a proposal to expand the HCMC-Trung Luong-My Thuan Expressway.

The project, with an estimated investment of VND39.8 trillion ($1.54 billion), is 1.8 times larger than the company's current build-operate-transfer (BOT) portfolio. It has already received in-principle approval from the Ministry of Transport under the public-private partnership (PPP) model.

Binh noted that major banks - including Vietcombank, Vietinbank, VPBank, and TPBank - have expressed strong confidence in both CII's financial capability and the project's potential, collectively pledging VND44.6 trillion ($1.72 billion) in financing, exceeding the required capital by 54%.

In addition to the expressway project, CII, listed on the Ho Chi Minh Stock Exchange (HoSE) as CII, is exploring several high-value ventures, including an elevated roadway along National Highway 51 (VND14 trillion or $541 million) and a transit-oriented development (TOD) project in the Hang Xanh area of HCMC (VND216 trillion or $8.35 billion).

Lower profit forecast for 2025

CII has set targets of VND3.89 trillion ($150.4 million) in revenue and VND335 billion ($12.95 million) in after-tax profit - a decline of 10% and 37%, respectively, from 2024.

While toll revenue is expected to grow by 6%, the real estate segment will remain subdued, as projects are still under development.

To address limitations in domestic accounting practices, CII is urging the Ministry of Finance to allow BOT project companies to adopt International Financial Reporting Standards (IFRS).

According to Binh, the Vietnamese Accounting Standards (VAS) fail to fully reflect the company’s intrinsic value, asset base, and profit-generating potential, particularly for long-term infrastructure and real estate developments.

CII highlighted that now under the VAS, revenue and profit from real estate projects can only be recognized upon handover - creating volatility in reported earnings.

“This method is flawed and paradoxical,” he said. “We’ve invested in these projects for years, incurred substantial costs, but can’t recognize a single VND of income until completion.”

The same challenges apply to BOT projects, which typically involve high upfront costs and large borrowings. Early-stage financials often show low or even negative profits due to heavy interest expenses.

However, as debt declines and traffic volume increases, profits improve in later years. “It’s a reporting paradox,” the CEO noted. “Early-stage losses are artificial, driven by debt service, while later-stage profits are inflated because costs have already been recovered.”

He also pointed to other distortions, such as CII's holding in CII Bridges and Roads Investment JSC (HoSE: LGC), which trades at around VND60,000 ($2.32) per share, but is still recorded at a book value of just VND12,210.

Similarly, the company’s land holdings remain recorded at historical costs, despite significant increases in market value.

12% dividend maintained despite lower earnings

In 2024, CII recorded revenue of VND4.33 trillion ($167.4 million), down 8% from the previous year, while net profit rose 36% to VND535 billion ($20.7 million).

Toll revenue surged 52% to VND2.56 trillion, while real estate revenue dropped 71% to VND325 billion ($12.54 million), due to limited handovers. The company also posted over VND1.13 trillion in financial income, largely from the Trung Luong-My Thuan Expressway project.

CII paid a 12% cash dividends for 2023, totaling VND368 billion ($14.2 million), and the board of directors proposed maintaining this rate for both 2024 and 2025.

To support its growth, the company plans to issue additional shares to raise its charter capital from VND3.17 trillion to VND6.24 trillion ($241.2 million). The issuance is scheduled for this year, pending approval from the State Securities Commission (SSC).

Some shareholders expressed concern over the feasibility of a 12% dividend payout given the lower 2025 profit forecast. Binh reassured them, saying that the company has VND1.7 trillion ($65.62 million) in retained earnings and dividend payouts are based on retained earnings, not annual net profit.

CII shares closed at VND11,950 ($0.46) on Friday.