Vietnam's major property developer Hoang Huy successfully raises $30.7 mln from parent company

Hoang Huy Investment Services JSC (HoSE: HHS) has successfully issued 64 million shares for VND800 billion ($30.7 million) via private placement to its parent company – Hoang Huy Financial Services Investment JSC (TCH).

These newly issued shares, priced at VND12,500 ($0.48) apiece, will be subject to a one-year transfer restriction from the closing date of the offering.

Together with over VND500 billion ($19.19 million) of its own capital, the company now has a total of VND1.3 trillion ($49.9 million) to acquire more than 50 million shares of HHS Capital JSC.

HHS Capital currently holds 7.45% of the shares in CRV Real Estate Group JSC (CRV). Following this transaction, HHS will directly and indirectly own 51.03% of CRV’s charter capital.

This increased ownership in CRV is part of HHS’s strategic plan to restructure its investment in the associate company. As of the end of Q1, HHS reported consolidated assets of VND5.49 trillion ($210.73 million), nearly 60% of which (VND3.28 trillion) was invested in CRV. Converting CRV from an associate into a subsidiary is expected to significantly alter HHS’s financial structure, particularly in terms of revenue and profit.

Analysts believe this M&A deal with CRV will strengthen HHS’s financials and help it record substantial future earnings, driven by CRV’s robust project pipeline. The company owns several large-scale real estate developments in the northern city of Hai Phong, including Hoang Huy-So Dau (VND1.5 trillion or $57.6 million), Hoang Huy Commerce (VND3.7 trillion), and Hoang Huy New City II (VND15.1 trillion).

In addition, CRV’s financial performance is another highlight. In the fiscal year 2023 (ending March 31, 2024), CRV reported a record consolidated net profit of nearly VND988 billion ($37.92 million) - the highest in its history. The company is expected to maintain strong growth momentum in 2025-2026, mainly from revenue recognition tied to the Hoang Huy New City II project.

Specifically, the firm targets revenue of VND4 trillion ($153.54 million) and after-tax profit of VND1.6 trillion ($61.42 million) in 2025, increasing to VND5 trillion and VND2 trillion respectively by 2026.

Given this strong profitability outlook, HHS’s consolidation of CRV is anticipated to significantly enhance its consolidated financial metrics, including revenue, net profit, and equity.

In another notable development, CRV resubmitted its initial public offering (IPO) application in June 2024, after previously withdrawing it for additional review. The internal restructuring of CRV’s ownership prior to its IPO is seen as a strategic move to optimize control and valuation ahead of its public offering.

On the stock market, HHS closed Friday at VND15,150 ($0.58) per share.