Phat Dat's strategy to successfully acquire new real estate projects

In 2020, chairman Nguyen Van Dat appointed you as CEO of Phat Dat. Taking on this new responsibility, how did you feel back then?

Throughout Phat Dat's 16-year history, the chairman and founder exerted his influence on every decision. In such a context, I found myself in a favourable situation thanks to the inherited strategic orientations from the chairman and the determined management team.

Besides this, Phat Dat has embarked on an ambitious plan for 2019-2023 to restructure its investment portfolio, targeting billions USD in market cap and exceeding 50 per cent in compound growth rate.

Growing up inside the organisation, I am enthusiastic about Phat Dat's development. My new task, which capitalises on the past achievements and simultaneously accompanies the chairman to write Phat Dat's further development, is really challenging.

When I received the appointment decision, many thoughts crossed my mind. I immediately told myself that I must live well, grow strongly, and see opportunities in adversities to strive.

Bui Quang Anh Vu, CEO of Phat Dat Real Estate Development Corporation

Being promoted to CEO, what did you learn from your predecessor about corporate management during restructuring?

I learned a lot from our founder Dat, his determination, consistency, and powerful characteristics, as well as his way of thinking and doing big things and his perseverance in pursuing set goals. Dat does not find it effective to hold two guns in two hands. It must be ten guns at a time.

Perseverance and patience enable us to endure what others can't stand; yet we are not afraid because fear is the source of all worries, sorrows, and rage. No matter how difficult it is, we must devise a plan with clear goals and carry it out effectively. Only then comes success.

At Phat Dat, we are trained to be consistent in thinking, detailed in planning, and stringent in evaluating results.

COVID-19 emerged right after you took on the CEO position. When following through with the restructuring strategy, how was the company's profit affected at that time?

When the pandemic broke out, production and business activities were put to a halt, and all businesses were affected. However, Phat Dat was not under much pressure because we're always proactive with measures to deal with force majeure situations. As part of its sustainable development strategy, Phat Dat has long prepared an extensive land fund and legal certainty for its projects.

Thanks to its strong financial capacity, as soon as the social distancing ended, Phat Dat quickly accelerated to complete the set goals. Furthermore, in 2020, the company increased the pre-tax profit set in the 5-year plan (2019-2023) to around $609 million.

Phat Dat's Cadia Quy Nhon is located in the heart of Quy Nhon city

Phat Dat changed its strategy from direct sales to wholesale. What advantages does this bring to your business?

In the past, Phat Dat pursued quite large projects such as The EverRich 2 and The EverRich 3. At that time, developing a 10-hectare project in the city centre was a huge endeavour and would take up lots of resources, time, and capital.

The chairman and board members had a lot of discussions and concerns before switching to wholesale. Our strategy is to develop projects and sell them quickly. In 2019, PDR swiftly earned a big profit with the wholesale approach for projects in Nhon Hoi Ecotourism City. These successful projects established Phat Dat's presence in the Binh Dinh market and enabled the business to maintain consistent high-profit growth in the fiscal years 2021 and 2022.

When starting the journey to conquer the new era (2019-2023), PDR identified some key goals, such as reaching $1 billion in market capitalisation.

However, as of 2021, the company has already reached a market capitalisation of more than $2 billion and Phat Dat is ranked third by market capitalisation in the real estate industry. To achieve such results, we only choose projects with clear legal records, quick sales, and quick cash flow.

It is rare for any real estate business to wholesale its products for quick cash flows because the risk of branding is also present. Why did Phat Dat follow this direction?

We have to be different in order to be successful; it's not appropriate to follow the crowd. Phat Dat focuses on its core competencies. Inflows will be generated at the highest speed by transferring all products at wholesale prices to partners. Phat Dat's way of doing business is a win-win. We share profits with our partners, and in return, we ensure capital circulation, on-track progress, and a strategy that focuses on our strengths.

Of course, the strategy may be right at this time but remain uncertain in the future due to the changing market. We, therefore, have to adapt. The problem is identifying the right friends, that is choosing reliable partners and brands.

In addition, we established Phat Dat Real Estate Services and Trading Company (Phat Dat Realty) in our effort to adapt to market changes and prepare for the future. Phat Dat Realty will sell property products not only from Phat Dat but also from other real estate developers and fulfil higher goals.

Such a wholesale approach requires a broad project portfolio for concurrent development. How did Phat Dat solve this problem?

In our development strategy, Phat Dat has plans for both long-term and short-term land usage. Short terms are for immediate project developments and quick inflow generation to serve long-term goals. Phat Dat's principle remains sustainable and speedy development.

Serenity Phuoc Hai in Ba Ria-Vung Tau province

Phat Dat currently owns over 7,500ha of land. Why does the company continue to acquire new land through mergers and acquisitions (M&A) to increase profits?

Phat Dat determined that its land must be expanded constantly. It’s not of a visionary business to have no preparation for the future but only immediate plans.

We believe that a well-established corporation must know how to maximise its strengths. Phat Dat has the expertise, skills, and experience to assess promising projects, and our partners possess efficient distribution networks. This harmonious combination has enabled Phat Dat with sustainable advances in its rapid development.

You mentioned skills to assess promising projects. What skills do you think Phat Dat possesses to acquire prime lands?

It is a matter of brand reputation to acquire prime lands. When there is a site ready for development, Phat Dat quickly implements a project on it. Thanks to that, we have earned the great trust of local authorities and partners. For example, Astral City in Binh Duong could have been sold to another company initially but ended up being acquired by us.

In addition, when acquiring lands, there are often problems. Thus, we have to figure out how to handle those difficulties. If it meant to be a smooth deal, anyone could do it. In order to win, we have to see what others can't see.

Another critical factor is that Phat Dat's team is very astute in legal matters. They not only know how to assess the market but also understand relevant laws. These are also people with great expertise who know how to work with authorities to solve problems together. Building such an elite team is not an overnight thing; it has to be day-by-day training. I am confident that anyone from Phat Dat's Investment Department would be an excellent asset for any businesses out there.

In terms of investment, are you willing to withdraw from projects that do not work out as expected?

I've been in Phat Dat for nearly ten years, but I haven't seen a case where we bought a project and left it halfway without developing it effectively. However, when doing M&A, a project must be sold in its golden time, not after that. It takes a thorough and insightful evaluation to identify a project's golden time, seize that chance, and make the right decision.

Nhon Hoi Ecotourism City in Binh Dinh province

Wholesale and M&A have offered Phat Dat speedy advances. Do you think at some point that Phat Dat needs to slow down a bit for more sustainable growth?

At any time, when it comes to the real estate business, a project must be developed and transferred quickly to generate inflows. Only policy changes or market slowdowns can cause liquidity to be on the low side.

Phat Dat's spirit is to non-stop try. When we were small, we implemented one project at a time. Now, we are growing bigger, so we develop 10 projects to achieve our ambitious targets. If we go slowly, we'll fall behind.

Therefore, I do not uphold the concept of working hard now to rest later. I'm not into the saying slowly but steady because that means going backwards; we go quickly and precisely.

Available land in Saigon is shrinking. How does Phat Dat aim to develop its land bank in the coming time?

Following Ho Chi Minh City, Binh Duong, Vung Tau, Dong Nai, and Dong Thap, Phat Dat continuously pursues projects along the central coast, such as Quang Ngai, Binh Dinh, Phu Yen, and others.

Besides this, Phat Dat does not choose markets from Hai Van Pass northwards because of our strategic focus. In the same fashion as fishing, we easily identify bands of fish in a familiar sea. Otherwise, we'll need to take a different approach to penetrate unfamiliar markets.

Phat Dat Real Estate might be added to the FTSE ETF portfolio with restructuring The shares of Phat Dat Real Estate Development JSC (HSX: PDR) may be added to two FTSE exchange traded funds (ETFs) portfolios in the first quarter of 2021.

Phat Dat buys back bonds three years prior to maturity Ho Chi Minh City-based developer Phat Dat Real Estate Development JSC (HSX: PDR) has recently reported a VND250 billion ($10.87 million) bond buyback before maturity, demonstrating the company’s commitments to investors and shareholders.

Phat Dat settles $22.5 million foreign loan Ho Chi Minh City-based developer Phat Dat has demonstrated its high commitment and strong financial stead with the prompt settlement of $22.5 million foreign loans.

Phat Dat reports 60 per cent rise in first-quarter profit Phat Dat Real Estate Development Corporation announced the business results for the first quarter of 2021, including a 60 per cent rise in after-tax profit on-year with market capitalisation surpassing $1.5 billion.

Phat Dat acquires "diamond" landbank with three road frontages in the heart of Danang Following the completion of a mergers and acquisitions deal, Phat Dat now owns a rarified 3-frontage landbank at the intersection of Bach Dang, Tran Phu, and Le Hong Phong streets in Danang. On the so-called billion-dollar axis of trade-culture-tourism in the city center, Phat Dat will develop the first branded residence project.

Phat Dat plans to pay 36.3 per cent dividends Phat Dat Real Estate Development Corporation will organise the annual general meeting of shareholders on March 26, expecting to approve relevant proposals to the company's business and operation plan in 2022 as well as the plan to pay a dividend of 36.3 per cent in shares.

Phat Dat and ACA foster lasting partnership Phat Dat Real Estate Development (PDR) and ACA Investments Pte Ltd – a fund management company under the Japanese Daiwa Securities Group – signed an investment cooperation agreement at the former's office. The event marked an important milestone for ACA as it also made an initial investment of $30 million in PDR.