Coteccons targets 'Quality Growth' with 25 per cent dividend plan

How would you assess Coteccons' 2025-2026 fiscal year performance, particularly its ability to balance reinvestment with returning value to shareholders?

Last year delivered improvement in both the scale and quality of growth. Revenue reached $1.37 billion, up 38 per cent, while profit after tax rose 73 per cent to $31.52 million – nearly twice the pace of revenue growth.

Photo: Coteccons

Net profit margin improved to 2.3 per cent. Notably, operating cash flow turned around from negative $48 million to more than $32 million. The cash position reached nearly $320 million, while receivables remained broadly stable despite strong revenue growth.

These results indicate that the company’s revenue growth is being converted more effectively into profit, cash flow, and balance-sheet strength. Based on the 2025-2026 performance, and after considering capital requirements for core operations, construction capabilities, technology, people, and the 2026-2027 growth plan, the Board of Directors plans to submit a 25 per cent cash dividend proposal for shareholder approval at the AGM. This represents a shift towards a more balanced approach between reinvesting for growth and sharing value with shareholders.

Dinh Thi Hong Tham, corporate secretary and authorised spokesperson for information disclosure at Coteccons. Photo: Coteccons

What underpins the company's confidence in sharing value with shareholders?

The core foundation is corporate governance. In the latest VNSI assessment conducted by Ho Chi Minh Stock Exchange, Coteccons achieved an overall environmental, social, and governance (ESG) score of 84 per cent – its highest score across all assessment periods.

Within this, Coteccons’ Governance pillar score reached 81 per cent, up 10 percentage points on-year and significantly above both the industry average of 53 per cent and the VN100 average of 61 per cent.

This reflects significant progress in strengthening our corporate governance system, enhancing transparency and control effectiveness, and building management capabilities aligned with Coteccons’ 'Quality Growth' strategy.

Our capital allocation approach is guided by three consistent principles: support sustainable growth, maintain a healthy balance sheet, and share value with shareholders when conditions allow. This discipline makes dividends a natural outcome of an efficient operating system, rather than a short-term objective.

Coteccons previously operated in 'Sales Mode' and is now shifting to 'Saving Mode'. What is driving this transition?

Four to five years ago, Coteccons faced a double crisis: the severe impact of COVID-19 and leadership-level disruption. At the time, the company had almost no new contracts, and a large operating system like Coteccons was running at only around 70-80 per cent of capacity.

‘Sales Mode’ was necessary to bring the engine back to full capacity – expanding the market, rebuilding customer trust, and securing enough work for the entire system to operate effectively again.

Four years later, Coteccons is in a very different position. Revenue has grown at a compound annual rate of 30-40 per cent, the scale of operations has been restored, and the system is operating at higher capacity.

With a sufficiently large revenue base, economies of scale are beginning to take effect: each additional unit of revenue no longer requires costs to rise at the same rate. The strategic focus must therefore shift from generating enough workload to extracting greater efficiency from the platform we have built.

This is the strategy behind ‘Saving Mode’. It does not mean scaling back our ambition, tightening the belt, or applying mechanical cost cuts. Coteccons still aims to grow, but not by winning more projects at any cost.

The priority is to make the engine – now operating at high capacity – run better: using resources more efficiently, reducing waste, optimising design, materials, and construction solutions, shortening delivery timelines, controlling costs, enhancing project quality, and managing cash flow more effectively.

Photo: Coteccons

What will drive Coteccons' long-term growth?

We see significant headroom from three key growth drivers: urbanisation, including public investment and infrastructure; industrialisation; and our 'Go Global' strategy. Together, these pillars underpin our ambition to deliver annual profit growth of 25-30 per cent over the medium term.

However, the focus is not simply on scale. Coteccons is moving from growth to 'Quality Growth', with disciplined project selection, execution capabilities, and operational efficiency as essential conditions. We prioritise projects with sound legal status, reasonable margins, a strong fit with our capabilities and risk appetite, and the potential to create sustainable economic value.

How will Coteccons improve capital efficiency?

The quality of growth matters more than scale. Coteccons is tightening discipline in project selection, strengthening working-capital control, optimising cash flow, and improving productivity. When these elements work together, return on equity can improve sustainably, cash generation becomes stronger, and our capacity to share value with shareholders is reinforced.

‘Saving Mode’ is a catalyst for this process. The objective is not a one-off cost-saving exercise, but to build a lasting culture of efficient resource use across the organisation – from tendering, procurement, and construction to office operations and ESG practices.

What message does Coteccons want to send to shareholders in this new phase?

The proposed 25 per cent cash dividend is more than a profit-distribution decision. It signals that Coteccons is entering a new phase defined by stronger governance, greater capital efficiency, higher-quality growth, greater openness to international investors, and a stronger commitment to sharing value with shareholders.

From growth to 'Quality Growth', and from value creation to value sharing, Coteccons is building a platform that enables shareholders to participate in and benefit from the company’s progress over the long term. ‘Saving Mode’ is part of that foundation – applying greater discipline today to create more room for sustainable growth and long-term value creation tomorrow.

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