Novaland has just released its 2023 biannual review report, which showed a net post-tax loss of VND1.09 trillion in the first half of 2023, or VND480 billion higher than the loss initially reported by the big real estate firm.

After nearly one year of difficulties and fluctuations, the real estate market showed positive signs in the first half of 2023. However, as financial institutions have tightened real estate credit, while market confidence has yet to be restored, Novaland’s liquidity still was not stable as expected. This led to decreases in turnover and profits in the biannual finance report.

Hoa Binh Construction JSC (HBC) has also reported that its profit was VND800 billion lower after the audit. The big player in the construction sector, which reported profit of VND100 billion some days ago, took a loss of VND700 billion according to the report.

Other major business indicators of Hoa Binh Construction were also lower than initially reported. HBC reported a decrease of VND30 billion in revenue, while the figure was VND72 billion after auditing.

According to Hoa Binh, its profit was lower after review because of adjustments in profits from the sale of holding company’s assets.

With a loss in the first half of 2023, Hoa Binh incurred an accumulated loss of VND2.8 trillion, which is higher than the capital contributed by shareholders.

Other businesses have reported sharp falls in profits after the biannual review. The profit of Dien Quang Lamp JSC decreased by two times to VND1.7 billion, while Sotrans’s profit dropped from VND125 billion to VND99 billion.

A sharp decrease of 60 percent in profit was reported for Coma 18, which meant a modest profit of VND5 billion. This is attributed to high business administrative costs, which increased by three times, and provisions against risks in accounts receivable. 

VietCredit reported a loss of VND74 billion after review, while it initially reported a profit of VND13 billion.

The profit decreases and losses, according to analysts, show the current situation of the real estate market and the difficulties realtors are facing.

Novaland was considered the leading real estate firm in Vietnam, and Hoa Binh one of the largest construction listed companies. The quiet climate of the real estate market last year, plus the complicated finance market, have affected many realtors.

As of the second quarter of 2023, Hoa Binh had incurred losses for the third consecutive quarter. Meanwhile, Novaland is negotiating with creditors, including bondholders, in an effort to re-stabilize its business.

The situation was made even worse because of internal problems. In early 2023, Hoa Binh experienced a long power struggle. The situation has recently become stable again.

Earlier, investors saw enterprises having to adjust figures in financial reports many times as auditors did not agree with the figures shown by businesses.

In early 2022, Hoang Anh Gia Lai Group’s business results in 2017-2019 were unexpectedly reconsidered, which turned it from a profitable into an unprofitable enterprise. The retroactive case of Hoang Anh Gia Lai stirred up the public. The unexpected accumulated loss of VND5 trillion ‘from the past’ then made the enterprise’s stockholder equity drop by 1/3.

After 10 years, Hoang Anh Gia Lai has gained initial results in the restructuring process. The group affirmed that the ‘debts are inconsiderable’ and it is making profits again.

Other enterprises have also been reported as facing difficulties, but also experiencing success in the restructuring. They keep optimistic about the future.

According to Novaland, some partners of the company still have not fulfilled financial obligations as shown in the contracts. Therefore, Novaland’s income in the first half 2023 decreased. The incomes would be recognized in the next accounting period, when the partners complete their financial obligations. The problems related to the legality of projects and investment procedures have almost settled.

Tran Chung