Handover delay of Mandarin Garden 2 to cut Hoa Phat’s profit by VND200 billion

Handover delay of Mandarin Garden 2 to cut Hoa Phat’s profit by VND200 billion

HSC has just released its assessment report on Hoa Phat Group (code: HPG). The report details HSC’s estimate of HPG’s net revenue in the first half at VND27.14 trillion ($1.2 billion), up 30 per cent on-year, and after-tax profit at VND4.473 trillion ($197 million), up 28.7 per cent.

HSC also outlined several short-term challenges of HPG. Specifically, the consumption volume of construction steel reduced to 148,822 tonnes in the first half of this year, down 11.4 per cent on-year and 34.92 per cent in comparison with previous months.

This decrease is a result of the heavy rains typical of June. Moreover, steel distribution agents need time for consumption after a peak in consumption volume in May. They may also be waiting for steel prices to increase before making purchases for reserves.

The average selling price has declined by 2.2 per cent since mid-June after increasing for 12 consecutive months from VND10.5 million ($463) to VND13.6 million ($600) per tonne. The price of construction steel is currently VND13.3 million ($586) in line with a global price decrease.

According to HSC, Mandarin Garden 2 project of Hoa Phat Group is currently being assessed for the suitability of its fire prevention and fire fighting system, the result of which could affect both the project’s delivery plan of its apartments and the group’s profitability.

Thereby, HSC forecasts a VND200 billion ($8.8 million) reduction in HPG’s after-tax profit for Mandarin Garden 2, and of VND94 billion ($4.14 million) for the decrease of steel volume.

Earlier, the Hanoi Police Department of Fire Fighting and Prevention issued a penalty of VND40 million ($1,760) for administrative violations by the developer of Mandarin Garden 2. Hoa Phat Group put the building into operation without a fire certificate.

The agency detected numerous violations of the fire code at the complex of 26-storey and 30-storey towers. For example, the construction of the commercial service area from the first to the sixth floor was not complete, and the fire detection and fighting systems were not operational.

In addition, the glass walls and fire doors in the elevator’s basement buffer room did not guarantee fire resistance in line with the approved design documents. There are also numerous violations related to the exits and fire safety system.