Vinaconex issues profitability boast despite slow market

Despite a faltering real estate market Vinaconex reported good profits

Particularly, thanks to an asset transfer valued at VND337.6 billion ($16 million) from Cam Pha cement project to Cam Pha Cement Co., the company reported a rise in profits in the last quarter of last year.

Vu Quy Ha, general director of Vinaconex, said their construction business made up a majority of total profits, offsetting frozen real estate activities. The proportion of revenues from construction increased from 3.09 per cent in 2012 to 60.12 per cent in 2013 and were valued at VND6.8 trillion ($325 million).

As expected, real estate activity revenues fell from VND1.8 trillion ($85 million) in 2012 to just over VND1 trillion ($51 million) in 2013, while revenues from industrial production and consultancy services saw no significant changes.

By the end of last year, Vinaconex reported revenues of more than VND11.3 trillion ($540 million), falling VND1.3 trillion ($63 million) compared to 2012.

Last year, Vinaconex’s financial activities dropped to VND54 billion ($2.6 million) from VND150 billion ($7.1 million) in the previous year while dividends skyrocketed to VND159 billion ($7.6 million).

Financial revenues included the corporation earning profits of VND8.4 billion ($400,000) from selling securities this year while in 2012 it earned no profits from this activity. Vinaconex also reduced its short-term securities investments from VND7.3 billion ($347,619) in 2012 to VND956 million ($45,523) in 2013.

The corporations interest payments on loans last year fell by VND305 billion ($14.6 million) against the previous year as a result of banks’ reducing their interest rates.

Despite lower revenues in 2013, Vinaconex saw a 683 per cent rise in profits against 2012. The sharp increase was attributed to the company laying-off more than 1,600 labourers which reduced, specifically, management costs to VND420 billion ($20 million) against 2012’s VND800 billion ($38 million).

In the area of property trading, Vinaconex divested from the Park City Project in Hanoi’s Ha Dong district. The corporation transferred 3.75 million shares, or 25 per cent of the chartered capital of Vinaconex Hoang Thanh – the investor in the Park City Project - to Perdana, an affiliate of Malaysia’s biggest timber cutting group Samling.

Last year, Vinaconex also put its position in the Splendora township – invested in by An Khanh JVC, a joint venture between Vinaconex and South Korea’s Posco E&C – up for sale. Vinaconex currently owns 50 per cent of the chartered capital of the $2 billion project but has yet to get a buyer to bite.

Although Vinaconex has pulled out of some projects, it still remains a real estate giant with property developments such as the 423 project and two urban area projects in Hanoi, the Housing Complex at the B3 Bloc in Danang, and the Cat Ba Amatina project in Haiphong. 

But these projects seem to be a growing concern for Vinaconex as of late, they require vast amounts of capital amid a static real estate market.