VPH suffers big losses on the lack of real estate revenues

Specifically, by the end of Q2/2024, VPH had generated roughly VND 9 billion in income, a 74% decline from the same period previous year. This money was mostly derived from building contracts for the Phu My, Phu Xuan, and Nhon Duc projects, totaling almost VND 6 billion. Notably, no money from real estate sales (CTC project revenue) was generated during this time, as opposed to more than VND 31 billion in the same period previous year.

In addition to a significant loss in net sales, its financial income fell by 46% year on year, to more over VND 8 billion, due to the lack of benefits from share transfers. Meanwhile, financial expenditures grew by 32% year on year to VND 22 billion, driven completely by interest charges, which jumped by 34% compared to the same time last year.

During this period, the firm had no selling charges, and administrative expenses were decreased by 27% year on year, to roughly VND 10 billion. However, other profit fell drastically by 92% year on year to VND 0.7 billion, resulting in a net loss of VND 22.3 billion, compared to a net profit of about VND 7 billion in the same time the previous year. This is VPH's second straight quarter of losses.

Explaining the loss, the company's leadership attributed it to a temporary loss due to the lack of revenue from real estate transfers. However, the leadership still anticipates 2024 to be a challenging year, with efforts underway to complete legal procedures for real estate projects.

In the first half of 2024, VPH's net revenue declined by 64% year on year to VND 15.6 billion. The net loss after tax exceeded VND 37 billion, compared to a net profit of VND 1.2 billion in the same time previous year.

As of the conclusion of Q2, VPH's total assets were at almost VND 2,400 billion, essentially unchanged from the start of the year. Inventory represented a sizable share of total assets, at roughly VND 1,100 billion. Short-term receivables fell by 12% from the start of the year, to almost VND 714 billion. Meanwhile, cash holdings declined by 31% from the start of the year, reaching slightly over VND 14 billion.

On the other side of the balance sheet, the company's liabilities were over VND 1,400 billion, up 4% from the beginning of the year, with total debt exceeding VND 854 billion, an 8% increase from the beginning of the year, mainly due to increased borrowing from individuals and other companies.

VPH's dismal business results contrast with the recovery and growth of the real estate market in Ho Chi Minh City and the southern region. According to data from the Ho Chi Minh City Statistics Office, in the first half of this year, real estate business revenue in the city was estimated at VND 123,887 billion, up 6.1% year-over-year. Revenue from land sales also brightened in the first half of this year, with the city collecting nearly VND 7,170 billion, compared to VND 4,650 billion in the same period last year.

While real estate business growth in Ho Chi Minh City was negative 6.38% for the whole of 2023, it has returned to positive growth in 2024, rising from 2.51% in Q1/2024 to 2.94% in Q2/2024.

According to a market research firm, the apartment market in Ho Chi Minh City increased supply by 1.3 times in the first half of the year compared to the same period last year, with around 2,356 units. The absorption rate reached 45% - 50%, up roughly 2.5 times from the same period last year.

At a regular meeting on the socioeconomic situation for the first six months of the year and key tasks and solutions for the last six months of 2024, Chairman of the Ho Chi Minh City People's Committee, Phan Van Mai, stated that in Q2/2024, the city resolved two out of seven commercial housing projects, with the remaining five projects expected to be addressed in the following quarter.

In the second part of the year, Ho Chi Minh City will promptly prepare resources to execute new real estate regulations enacted by the National Assembly, such as the Land Law, Housing Law, Real Estate Business Law, and Credit Institutions Law.

The Ho Chi Minh City People's Committee acknowledged that while the real estate market has seen positive changes, many obstacles remain. Resolving issues in some projects has been slow and incomplete due to the lack of central government policies, differing interpretations of specialized laws, and other factors.