Hoa Sen drops out of real estate over poor results

The Van Hoi Lake eco-tourism project. Source: yenbai.gov.vn

Vu announced dissolving subsidiary Hoa Sen Van Hoi JSC, the developer of the Van Hoi Lake eco-tourism project in the province’s Tran Yen District due to the firm’s and the Yen Bai Department of Investment and Planning’s decision to halt the project.

According to the plan, Van Hoi eco-tourism project is forecast to be constructed on a 1,346-hectare site, including a 10ha resort, 35ha eco-park, 77ha high-end urban and villa areas, and a VND1.2 trillion ($53 million) shopping mall and Hoa Sen Yen Bai Hotel. This is also the local steel giant’s first trillion-VND real estate, tourism, and service project.

Hoa Sen Van Hoi was established in 2016 with 70 per cent of charter capital from its parent company Hoa Sen Group.

In addition to Van Hoi, the steel king intended to establish three more subsidiaries specialised in resort and tourism property.

Vu previously affirmed that he was confident about entering the real estate segment, but Hoa Sen Van Hoi’s dissolution shows that the corporation hit a snag in the segment.

Previously, Hoa Sen also divested all of its capital from three other real estate projects and the Hoa Sen-Gemadept International Seaport logistics project.

However, Hoa Sen is also facing troubles in its main segment, steel, where it has been reporting concerning growing financial imbalance. At present, the once iconic steel firm has to deal with huge debts, which account for 78 per cent of its chater capital.

According to its financial report in the 2017-2018 fiscal year’s third quarter, Hoa Sen’s debt stand at nearly VND18.4 billion ($814.1 million), including VND15.88 trillion ($702.65 million) from financial lending. The firm needs to pay hundreds of billions of VND for interest payments annually, which signifies a sizeable chunk of its profit.