The bigger the real estate company, the larger the debts

May 03, 2018 | 14:19

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There are 58 real estate companies listed on the stock exchange that have a total debt of nearly VND332 trillion ($14.6 billion).

the bigger the real estate company the larger the debts

HaDo Centrosa Garden project of HaDo Group

58 listed real estate firms amass stellar debts

After great improvements, Hoang Anh Gia Lai JSC (code: HAG) recorded VND371.6 billion ($16.4 million) in after-tax profit but financial indicators are still not encouraging. At the end of 2017, interest payments for debts reached VND1.404 trillion ($61.9 million).

The company owes to TPBank VND321.5 billion ($14.2 million), BIDV VND172 billion ($7.6 million), LaoVietBank VND120 billion ($5.3 million), Sacombank in Cambodia VND80.7 billion ($3.6 million), Bank for Investment and Development of Cambodia Plc. (BIDC) VND34.6 billion ($1.5 million), and TPBank VND1.19 trillion ($52.4 million) which is payable in the next eight years.

Ernst & Young Vietnam Co., Ltd. (E&Y), the auditor of Hoang Anh Gia Lai 's financial report 2017, said: "The short-term debts of Hoang Anh Gia Lai were double of the $157 million worth of short-term property assets."

"Heavy debt" is not only a curse of Hoang Anh Gia Lai, as it is a widespread ailment among real estate companies. A survey of baogiaothong.vn showed that the bigger the companies, the more debts they own.

Other real estate companies owing hundreds of millions of dollars are Quoc Cuong Gia Lai JSC with VND7.412 trillion ($326.5 million), Phat Dat Real Estate Corporation with VND7.115 trillion ($313.4 million), KinhBac City Development Holding Corporation with VND6.741 trillion ($297 million), Becamex IJC with VND6.338 trillion ($279.2 million), Saigon Commerce Real Estate JSC with VND6.070 trillion ($267.4 million), and Nam Long Investment JSC with VND4.198 trillion ($185 million).

The deeper the debts, the greater the inventory

According to baogiaothong.vn, the total debts of the 58 real estate firms listed on the stock exchanges are nearly VND332 trillion ($14.6 billion), which is double their total equity.

The debts of almost all of these firms exceed their equity, while the larger debts come with larger inventories.

Company	Debts	Equity	Inventory
Phat Dat Real Estate Corporation	VND 7.115 billion ($313.4 million)	VND1.625 billion ($71.6 million)	VND5.147 billion ($226.7 million)
Quoc Cuong Gia Lai JSC	VND 7.412 billion ($326.5 million)	VND4.011 billion ($176.7 million)	VND5.540 billion ($224 million)
TECBIS 584 JSC	Four times higher than the equity	x	x
Licogi 16 JSC (LCG)	2.5 times higher than the equity capital	x	x
HaDo Group (HDG)	Three times higher than the equity	x	x
Development and Investment Construction Corporation (DIG)	Twice higher than the equity	X	X
D2D Company	Twice higher than the equity	X	X
RES 11 JSC (D11)	2.9 times higher than the equity	x	X

Notably, many firms have much more short-term debts than short-term assets, which means it is very hard for them to keep ahead of debt payments.

Company	Short-term debts	Short-term assets
Novaland	VND36 trillion ($1.6 billion)	VND49.224 trillion ($2.17 billion)
VinaLand Invest Corp (VNI)	VND101.7 billion ($4.5 million)	VND8 billion ($0.35 million)
TECBIS 584 JSC (NTB)	VND3.948 trillion ($174 million)	VND744 billion ($32.8 million)
PPI Corporation	VND248 billion ($11 million)	VND201 billion ($8.85 million)