Many real estate businesses are going through an unprecedented period of difficulty, starting with the bond debt crisis and soaring bank interest rates. Even some leading real estate developers have been in a state of "frozen" liquidity for a long time. Business efficiency declined heavily when transaction volume and absorption rate decreased continuously.
Talking more about bond pressure , according to FiinRatings report, the total value of bond payments (including principal and interest) due in 2024 is high, up to 376,500 billion VND; Among them, real estate bonds have the highest value, reaching 154,800 billion VND. The pressure to repay bonds is greatest for the real estate industry. With the current real estate market context and weak credit quality, investors will have difficulty creating new cash flow to be able to fulfill bond debt obligations. This is still a big risk for real estate stocks, when one business has a problem, it will have a knock-on effect on other businesses.
Reflections from many listed real estate businesses show that, although the market has warmed up, cash flow for businesses is still very difficult. MB Securities Company (MBS) believes that in the second quarter of 2024, the real estate industry will recover but differentiate. The business results of the residential real estate business group have not seen a breakthrough in the second quarter due to a lack of projects to hand over and the legal status of the projects has not changed much before the relevant laws. take effect. Factors such as interest rates and reduced selling costs will partly support this second quarter's profits.
The fulcrum in the coming time for real estate stocks to recover is three new laws related to the real estate market (Land Law 2024, Real Estate Business Law 2023 and Housing Law 2023) implemented from August 1, 2024. Businesses with good products will sell better.
The third quarter of 2024 will be the time to evaluate whether cash flow will return strongly to push up the price of the group of real estate stocks that have just created a bottom. If expectations come true, the real estate group will become a pillar, a fulcrum supporting the overall index. Data show that cash flow moving into the real estate industry increased again and the transaction volume ratio was higher than other industries, but not at an impressive level to predict a strong and convincing increase wave. .
According to the assessment of experts from BVS Securities Company, profits are expected to recover and increase in most real estate businesses because the recovery will spread more to areas outside Ho Chi Minh City and Hanoi. While land funds of real estate businesses are largely distributed in the provinces. Besides, low-rise products account for the main proportion in the product structure in the provincial market and the gross profit margin of low-rise products will be better than high-rise.
Accordingly, P/B valuation in 2025 - 2026 will improve and create an attractive discount compared to the industry average. The room to improve P/B valuation may be greater in small-scale real estate businesses, or product development capacity is still far from large businesses, if the limitations can be improved. mechanism. Enterprises with proven development capacity such as NLG and KDH are likely to soon be revalued to a reasonable level, or 2.1 times higher than the industry's average assumption in 2025 - 2026.
