From profit to huge loss after audit
The semi-annual consolidated financial statements of real estate companies, after being reviewed by an auditing unit, revealed many worrying points.Some companies that had been losing money got worse, even turning profits on self-reported reports into large losses after being reviewed.
The audited semi-annual financial report for 2024 of No Va Real Estate Investment Group Joint Stock Company (Novaland) shows a difference in pre-audit and post-audit profit after tax. Accordingly, Novaland's consolidated profit after tax in the first 6 months of 2024 recorded a loss of VND 7,327 billion compared to the self-prepared financial report with a profit of VND 345 billion.
Novaland representative said that this loss mainly comes from the provision for land rent and land use fees payable according to the 2017 land price plan of the 30.106ha Nam Rach Chiec project (An Phu ward, Thu Duc city), commercial name is Lakeview City project (investor is 21st Century International Development Company Limited), based on the tax authority's announcement on January 8, 2021. The value of the provision for payable amounts is VND 4,358 billion.
In the semi-annual financial report, the independent auditor also expressed his opinion on Novaland's going concern assumption. Regarding the above content, Novaland said that it will continue to implement many solutions to be able to generate enough cash flow to finance the business's operations.
Danh Khoi Group Joint Stock Company is in a similar situation. After review, the company lost more than VND10 billion, a large difference compared to the profit of more than VND7 billion in the previous self-made report. As of June 30, Danh Khoi had short-term financial debt of more than VND342 billion and long-term financial debt of more than VND46 billion. Of which, the company had more than VND256 billion in bond debt. However, the company has not paid VND139.5 billion in overdue bonds with interest of nearly VND24 billion.
In addition, a common picture today is that many real estate businesses also continuously report losses right from the time they prepare their own financial figures without needing the "scrutiny" of an auditing unit. For example, Quoc Cuong Gia Lai Joint Stock Company reported a loss of 16.6 billion VND in the first half of the year, continuing the loss trend of the same period last year (13.7 billion VND). In the revenue structure, the real estate segment decreased sharply.
Tien Phuoc Group Joint Stock Company (Tien Phuoc Group) has just reported its financial situation for the first 6 months of 2024 with a net loss of more than 181 billion VND.
Weak debt repayment cash flow
The report on the performance of listed real estate enterprises by Vietnam Investment Rating Joint Stock Company (VIS Rating) recently released shows many problems facing real estate enterprises today.
In the first 6 months of 2024, the total debt of real estate investors listed on the stock market increased by 19% compared to the same period in 2023. The increase in outstanding debt mainly came from the development of new projects of some large real estate companies such as: Van Phu Invest (total debt increased by 54% compared to the same period in 2023), DIG (increased by 59%), Nha Khang Dien (increased by 33%)... The debt figure is forecast to continue to increase in the context that many businesses are advocating increasing borrowing to develop new projects.
Meanwhile, although the market has shown signs of improvement, inventory continues to increase, especially for businesses with projects facing legal problems or illiquid segments.
VIS Rating experts also provided a remarkable statistic, that is, more than 2/3 of listed investors have cash flow to repay debt from weak to extremely weak levels.
Dr. Nguyen Duy Phuong, Investment Director of DG Capital, believes that the market may have to wait until 2025 for positive changes. New laws related to the real estate market will bring positive impacts, but at the same time, they will also purge incompetent investors.
"The ability of investors to access new capital sources is expected to improve in late 2024 and in 2025, thanks to the growth of bank credit for real estate business and the issuance of shares doubling compared to the previous year," Dr. Phuong stated.
