Volatile real estate market puts pressure on business results

A volatile real estate market caused revenues and profits of realty businesses to decrease sharply in the fourth quarter of 2022.

Phat Dat Real Estate Development Joint Stock Company (PDR) reported net revenue of 14.6 billion VND (622,600 USD) in the last three months of 2022, a sharp decrease compared to the 1.29 trillion VND recorded in the fourth quarter of 2021.

The company suffered an after-tax loss of 229.4 billion VND in Q4 of 2022, while in the same period in 2021, it reported a net profit of 751.4 billion VND. This was considered Phat Dat's "failure" quarter as the company reported a loss for the first time since it announced business results.

Dat Xanh Group Joint Stock Company (DXG) reported a loss of 460 billion VND in the last quarter of 2022. During the period, the company's net revenue reached 984.3 billion VND, down 56.6% year-on-year. In which, sales of apartments and land plots reached 400.2 billion VND; real estate brokerage services reached 394.8 billion VND, down 68.8% and 55.9%, respectively, over 2021.

In the fourth quarter of 2022, LDG Investment Joint Stock Company (LDG) reported an after-tax loss of 38.88 billion VND and its revenue decreased by 83.7% year-on-year due to high costs.

Although no loss was reported, No Va Land Investment Group Corporation (NVL) announced its business results in the fourth quarter of 2022 with net revenue of only 3.24 trillion VND, down 29% over the same period of 2021. Accordingly, profit after tax in the period only reached 239.4 billion VND, down 73.5% year-on-year.

For the whole year, this real estate group recorded nearly 11.15 trillion VND of consolidated revenue, down 25% year-on-year. Profit before tax decreased by 19% to 4.11 trillion VND and profit after tax decreased by 34% to more than 2.29 trillion VND. Notably, Novaland's inventory amounted to nearly 135 trillion VND.

Nam Long Investment Joint Stock Company (NLG) announced business results with a net profit in the fourth quarter of 2022, down 23.3% over the same period, at 589.7 billion VND. Compared to other businesses in the industry, this figure shows the company was least affected in the fourth quarter of 2022.

Specifically, net revenue reached 1.63 trillion VND, down 63.1% over 2021. Meanwhile, financial revenue increased 5.4 times, reaching 306.9 billion VND. However, selling and administrative expenses of the enterprise reached 186.2 billion VND and 199.1 billion VND, both down 51% and 10.3% respectively over the same period last year.

The forecast is still poor

The decline of real estate stocks is attributed to the lack of corporate cash flow, caused by the tightening of the bond market and bank credit room.

In the latest report, VNDirect Securities is not optimistic about the recovery of residential real estate in the short term because the real estate industry is facing three big challenges. That is, investors face difficulties in debt restructuring due to tightening bank loans to real estate and strict supervision in the issuance of corporate bonds. In addition, rising interest rates weaken demand for houses.

"Investors should focus on businesses with healthy financial structures and solid cash flow from previous sales," VNDirect's report said.

KB Securities (KBSV) recently forecast that the real estate market in 2023 will still face many difficulties in the context that home loan interest rates are expected to continue to increase and deposit rates will increase, affecting homebuyers' borrowing needs.

Legal issues often take a long time and there are many risks that can slow down the process of approving and granting project construction permits. Realty investors also face more difficulties in accessing capital due to restricted bank loans to the real estate sector and the unstable bond market.

“Real estate stocks have plummeted, reflecting the negative situation about the real estate market. The short-term outlook for these stocks is still unclear,” KBSV noted.

Similarly, in the recently released 2023 strategy report, Viet Dragon Securities (VDSC) said that the country's real estate industry in 2023 will generally still face many challenges in the context of interest rates rising at a high level.

However, from a positive perspective, Ngo Minh Duc, CEO of LCTV Investment said that when interest rates go down in the second half of 2023, the real estate market will warm up along with benefiting from infrastructure as the 3,000-km North-South expressway is open to traffic within the next 2-3 years./.