Coteccons broadens horizons with new ventures and global expansion

October 18, 2023 | 14:20
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Coteccons is setting its sights on international expansion with a new overseas construction subsidiary and plans to enter the infrastructure, property and energy industries.
Coteccons broadens horizons with new ventures and global expansion

Opening the AGM, Bolat Duisenov, chairman of the Board at Coteccons, shared that over the past six months, the company has been assessing the opportunities and challenges.

Despite the subdued market, with GDP growth falling below expectations and a lack of momentum in the real estate sector in cities like Ho Chi Minh City and Hanoi, he reported that a few permits have been granted for new projects.

"We cannot change the market, but we will always find opportunities to make a quantum leap," emphasised Duisenov.

Duisenov also has asserted that the failure to secure the 5.10 tender package for Long Thanh International Airport will not adversely impact the company's prospects. He highlighted that the said bid held minor weightage in Coteccons’ overall business plan, as the enterprise has set its sights on more expansive infrastructure construction projects.

"Missing out on the Long Thanh International Airport project was a significant opportunity we let slip. I am deeply saddened and filled with emotion for not winning the bid. However, this does not mean we are going to walk away and give up," Duisenov remarked.

For the financial year of 2024, Coteccons projects a revenue of VND17.8 trillion ($751 million), marking an impressive 163.8 per cent on-year increase. The post-tax profit is projected at VND274 billion ($11.6 million), skyrocketing by 424.6 per cent compared to 2023.

To offer a comparison, in the 2023 fiscal year, Coteccons reported a revenue of VND6.7 trillion ($282.7 million), achieving 88 per cent of its planned target, and a post-tax profit of VND52 billion ($2.2 million), which exceeded the yearly goal by 18 per cent.

For the 2024 financial strategy, Coteccons plans to strengthen its repeat sales, upgrade quality standards, and enhance productivity on site. The firm aims to adopt international standards for efficient risk management, improve the system's quality, streamline its operations, and optimise costs. There's a clear emphasis on enhancing operational efficiency, business culture, and continuing the investment in human capital development.

Coteccons decided not to distribute dividends in the 2023 fiscal year, retaining all its profits.

The company's leadership disclosed that there were outstanding issues with contractors of the former management group, relating to payment settlements. Specifically, on July 24, Coteccons received a notification from the Ho Chi Minh City People's Court about initiating bankruptcy proceedings against the company due to contractual disputes with Ricons Construction Investment JSC. As of the end of Q2/2023, the outstanding debt between Coteccons and Ricons was over VND322 billion ($13.6 million).

However, the court later dismissed the bankruptcy proceedings against Coteccons.

In other significant developments, on October 7, Coteccons decided to establish Coteccons Constructions Inc. This venture aims to provide construction services in overseas markets, investing with equity capital to avoid resorting to borrowed funds.

In line with the company's leadership strategy, in August 2023, Christopher Senekki was tasked with exploring Coteccons and its subsidiaries' international business expansion. He was also appointed as the deputy general director at Covestcons Ltd. (a subsidiary of Coteccons).

Previously, Senekki served as deputy CEO of Coteccons and was relieved of his duties on August 25 to assume his new role at Covestcons.

During the AGM's discussion session, when questioned about the company's strategies to tap potential and future core operations, Duisenov responded, "From a top-tier perspective, the company is focusing on being the first choice for customers and talent, as well as diversifying our revenue through varied business areas."

Emphasising the company's dedication to its core strengths, he said, "Diversifying the business model is imperative, but it takes time. We remain focused on our primary goal of construction quality. With our client portfolio and development strategy, our business results are improving."

According to Coteccons’ CEO Vo Hoang Lam, prior approaches to public investment projects were not quite aligned. Post this setback, the company initiated a procedure to extract key learnings.

"We are studying and exploring new approaches in line with our international main contractors. Coteccons aims to propose the best construction methods at the most suitable prices, presenting the government with the most optimal solutions. I believe if we continue refining our approach, opportunities will find their way to Coteccons," Lam stated.

As Coteccons branched out into infrastructure construction, some shareholders raised concerns about the company's prospects in future projects. A sentiment emerged that, despite numerous infrastructure projects being rolled out, Coteccons remained a mere spectator. These shareholders challenged the company's management to demonstrate their capability in this new venture.

In response, Lam passionately spoke of the plans, reiterating that the Long Thanh International Airport is just one of many pivotal public investment ventures on the horizon.

"With Vietnam's robust economic growth projected over the next 3-5 years, there will be a surge in major infrastructure projects. Coupled with rapid urbanisation and a flood of foreign capital investments, there will be a demand for numerous support structures. Consequently, we forecast a 40-45 per cent growth in the construction sector, and Coteccons is poised to capture a significant market share," Lam conveyed.

Beyond airports, infrastructure projects encompass expressways, urban rail lines, and numerous other public projects. Coteccons is meticulously examining these opportunities, focusing primarily on large-scale projects.

The company has been consolidating its team, addressing lingering issues, and optimising its operational capacity.

"Following the Long Thanh International Airport bid, we've established a specialised unit dedicated to infrastructure and public investment. Our objective is to establish a foothold in the infrastructure segment, mirroring our stature in the residential and industrial sectors," said Duisenov.

He also believed it would take another 6-18 months to see tangible results, contingent on the overall development of public investment in Vietnam.

Additionally, Coteccons is planning to diversify into social housing construction and renewable energy.

On the flip side, Duisenov also announced that the company is setting its sights on elevating its construction standards to an international level. "We are moving closer to global standards. Our objective is to bring our company's capabilities, quality, and construction norms to serve a broader market and make our mark on the world stage," he said.

Currently, a major Coteccon's client based in Vietnam has expanded its operations into three countries. Therefore, there are high hopes from the company that this client will entrust them with projects overseas.

"Additionally, we have other clients who express a keen interest in partnering with us in foreign markets," Duisenov highlighted. "We anticipate that over the next 4-6 months, we will provide a more detailed insight into our strategies for international market expansion."

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Coteccons announces overseas expansion Coteccons announces overseas expansion

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By Trung Duong

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