LOOKING FOR THE POTENTIAL STOCK IN CONSTRUCTION AND REAL ESTATE
Tue , 16/11/2021, 08:43:47 (GMT+7)
With thousands of hectares of land bank and assets, VCG of Vietnam Construction and Import-Export Corporation (Vinaconex) is regarded as having a substantial growth potential among the group of real estate stocks. What assets does Vinaconex own?
As of September 30, 2021, Vinaconex has total assets of VND 30,840 billion, a 57% increase from the beginning of the year. However, the analysts evaluate the assets that Vinaconex has accumulated after many years of operation is much more higher than the book value.
If we analyze in-depth Vinaconex business activities, we can see how valuable and profitable their assets are. For instance, VCG has a dominant amount of investment capital in fields like hydropower (Ngoi Phat hydropower plant with Nedi2 company - total capacity of 84 MW, and Dak Ba - Quang Ngai hydropower plant – capacity of 30 MW).
The education field, which many Corporations consider to be their golden goose, is also Vinaconex’s forte with the Ly Thai To education system having 4,000 students and 2 preschools, 1 primary school and 1 junior & senior high school located on 2.4 hectares of area ( in Trung Hoa Nhan Chinh Urban Area, Hanoi) that is 100% owned by VCG. In particular, Vinaconex also has strength in producing and supplying clean water with Viwaco Joint Stock Company and Dung Quat Water Factory, which have a total retail production of 200,000 m3 per day, etc. As for real estate, VCG is currently one of the companies with the greatest potential since it owns a number of projects that are being used for leasing, including the Grade A office building at 34 Lang Ha (Hanoi), 47 Dien Bien Phu (HCMC) Vinata Tower, Vinaconex Cho Mo building, N05, valuable properties in Trung Hoa Nhan Chinh Urban Area and in HCMC as well as others across the country that owned by Vinaconex’s subsidiaries.
With a long-term vision and orientation to build major projects, Vinaconex has accumulated a land bank of up to 2,000 hectares in many locations, including Hanoi, Hai Phong, Quang Ninh, Da Nang, Quang Nam, Phu Yen, and so on. It can be listed as the Cat Ba - Amatina tourist urban area project with a scale of 172 hectares and a total investment of nearly US $6 billion on Cat Ba island (Hai Phong); the Green Diamond office and luxury apartment complex project on Lang Ha street (Hanoi), KM3 - KM4 Urban Area in Mong Cai city, (Quang Ninh province), the Expanded Hoa Binh boulevard urban area, Kim Van - Kim Lu urban area, Phu Yen tourist area (Quang Nam province), etc. In the ongoing strategic planning, VCG aims to attain a land bank of 5,000 hectares by 2025.
It is worth to note that Vinconex, with its outstanding construction and installation capabilities, is among Vietnam's leading contractors today. Moreover, this Corproation is highly appreciated for it capacity to develop real estate projects through substantial projects in Hanoi. In which, Trung Hoa Nhan Chinh New Urban Area Project with a total land area of around 30 hectares and a total investment of VND 273,624 billion, is a synchronously designed and high-quality residential area for about 15,000 residences. The N05 high-class apartment building (Trung Hoa Nhan Chinh), or North An Khanh New Urban Area Project covering 264.13 hectares in Hoai Duc district is also remarkable project in Hanoi.
With the brand name and reputation that has been affirmed through major projects, it is believed that the capacity and experiment to undertake real estate projects of Vinaconex would both generate high profits for the Corporation and enhance the living quality in the communities where the projects locate.
The enterprise benefits from public investment policy
In addition to the investment field with the above-mentioned outstanding and potential projects, the capacity of a leading contractor in Vietnam in all three major segments of traffic, industry, and civil construction has brought about abundant jobs to Vinaconex as the Government promotes allocating large resources to infrastructure investment such as highways, wharves, airports, etc.
The Corporation has signed construction contracts worth up to tens of billions of VND so far, which include many key national public investment projects, such as the significant bid packages for the Eastern North-South Expressway project in the 2017–2020 period: Phan Thiet - Dau Giay; Phan Thiet - Vinh Hao; Mai Son - National Highway 45; Nghi Son - NH 45; Vinh Tuy Bridge construction investment project phase 2 in Hanoi, some bidding packages of Long Thanh airport, Phu Bai airport, etc.
According to Vinaconex, from 2021 onward, the revenue from construction is expected to increase by about 20% annually. Its gross profit margin in this field also increases by 9%, making it 30% greater than the average for the construction industry. That is all thanks to its group of highly qualified and experienced engineers as well as the modern technology and management system that Vinaconex has focused its investment in.
The Government has launched a number of stimulus packages for public investment, construction, real estate, and released new law documents relating to implementing projects in these fields to rebuild the post-pandemic economy. As a result, enterprises operating in the fields of construction and real estate benefit and are considered to have a lot of profit potential from current and upcoming projects.
In addition to the huge assets accumulated over many years of operation, Vinaconex has lately been highly appreciated for its efficient restructuring in line with the set strategy. Specifically, VCG has streamlined the investment portfolio to avoid sprawling investment, divested capital in underperforming businesses, and concentrated on three core areas: construction, real estate, and financial investment.
In the near future, VCG is going to restructure equity at Cam Pha Cement Factory, EVN International JSC, some BOT projects for resources generating, perform M&A of real estate projects that have the legal procedures done for execution within the year and the creation of a reserve land bank for the upcoming years to make the proportion of investment value in Vinaconex's future revenue and profit structure larger and larger.
Vinaconex's capital investment in the upcoming projects is expected to exceed trillions of VND, particularly in high-potential infrastructure projects. For example, the Van Ninh international seaport project in Quang Ninh commenced in late October, to which Vinaconex contributes 40% of the capital and serves as a general contractor.
VCG shares reached a closing price of 45,800 VND per share on November 15. It can be seen that in the both short and medium terms, the market price of VCG shares is indeed at an attractive level for investment when compared to the total assets, and actual potential of this Corporation, and compared to other enterprises in the same fields.
