Financial pressure surrounds, how is the debt of real estate companies?

Despite a challenging year like 2023, when it seemed real estate businesses were struggling due to market fluctuations, a very positive indicator emerged: the majority of loans of leading real estate companies tended to decrease compared to the beginning of the year, showing that even during the most difficult period, real estate businesses were still very proactive in settling their loans.

Right in the first days of the new year, HNX data shows that dozens of real estate companies have settled their bond debt, mostly due to the companies proactively repurchasing the bonds before maturity and settling the bonds for bondholders.

According to the Q4/2023 financial report, as of December 31, 2023, Nova Real Estate Investment Group Joint Stock Company ( Novaland , HoSE: NVL) recorded liabilities of VND 195,874 billion, equivalent to 81% of the company's total assets and a decrease of 8% compared to the beginning of 2023. Of this, financial debt accounted for VND 57,704 billion, a decrease of approximately VND 7,000 billion compared to the beginning of the period.

Novaland's debt structure is primarily composed of bond loans totaling over VND 38,626 billion, with only over VND 9,400 billion in bank loans. However, reducing thousands of billions of dong in debt at Novaland is still a drop in the ocean, as the company is using excessive financial leverage with its massive debt burden, while its financial situation is deteriorating.

In the early days of 2024, Novaland's Board of Directors also announced that it would issue 1.37 billion shares, expected to raise approximately 13,700 billion VND to restructure debt and pay off outstanding debts.

Many companies are aggressively repurchasing bonds before maturity.

Among real estate companies , Phat Dat Real Estate Development Joint Stock Company (HoSE: PDR) was the most active in debt repayment. By the end of 2023, this real estate company had also completed its series of bond debt repayments.

In 2023, Phat Dat set a goal of settling all outstanding bond debt by the end of the year, leaving only bank debt and loans from other parties. By the end of 2023, by repurchasing the entire two tranches of bonds with a total face value of VND 800 billion, Phat Dat officially reduced its outstanding bond debt to zero.

Accordingly, as of December 31, 2023, the company's liabilities had decreased by 15% to VND 11,490 billion, of which other short-term liabilities amounted to over VND 3,182 billion and other long-term liabilities amounted to VND 4,578 billion. Borrowings accounted for over VND 3,104 billion of total debt, a 30% decrease compared to the beginning of the year.

Also actively repaying debt, the total liabilities of Kinh Bac Urban Development Corporation - JSC (HoSE: KBC) as of the end of 2023 decreased by 22% compared to the beginning of the year, to VND 13,226 billion.

Total financial debt stands at over VND 3,659 billion, a 52% decrease compared to the beginning of the year, accounting for 11% of the company's capital. Of this, long-term bank loans account for over VND 3,322 billion.

In 2023, Kinh Bac also actively repurchased bonds ahead of schedule. Previously, in March-April 2023, the company repurchased the entire VND 2,000 billion worth of two bond tranches with codes KBCH2124002 and KBCH2124003. By the end of May 2023, the company continued to repurchase bonds with code KBC121020 ahead of schedule.

Following the aforementioned transactions, Kinh Bac's outstanding bond volume has decreased to VND 1,157 billion. Regarding the KBC121020 bond issue, KBC stated in early 2024 that it had prepared the necessary funds to "pay off" the bonds.

In addition, Kinh Bac stated that it has implemented a strategy prioritizing the use of all financial resources to make timely payments. Furthermore, the strong increase in cash flow from industrial park operations has also contributed to providing the company with the funds to repay its debts.

At Dat Xanh Group Joint Stock Company (HoSE: DXG) , total liabilities at the end of 2023 amounted to VND 14,600 billion, a 10% decrease compared to the end of the previous year. Of this, VND 11,600 billion was short-term debt, and nearly VND 3,000 billion was long-term debt.

Dat Xanh's debt structure at the end of Q4/2023 decreased by 8% to VND 5,289 billion. Meanwhile, taxes and other payments to the state increased by 7% to VND 798 billion.

2023 was an extremely difficult year for the company, clearly demonstrated by the need to lay off 1,305 employees in 2023, from 3,773 at the end of 2022 to 2,468 at the end of 2023. The number of subsidiaries of Dat Xanh also decreased to only 84 companies, of which 8 subsidiaries operating in the real estate sector are undergoing dissolution procedures.

Vinhomes' debt-to-equity ratio is 0.31 times, with outstanding debt accounting for 12% of total capital.

In contrast to the aforementioned companies, Vinhomes Joint Stock Company (HoSE: VHM) recorded positive debt growth after one year, with total outstanding loans exceeding VND 10,000 billion.

Vinhomes' liabilities as of the end of 2023 totaled VND 261,991 billion, a 24% increase compared to the beginning of the year. Growth was recorded in both short-term and long-term debt, but the majority of the company's debt remained short-term.

The company's financial debt reached VND 56,682 billion, with a debt structure including VND 14,813 billion in short-term loans and over VND 35,689 billion in long-term loans. The majority of the company's debt is from banks; in addition, Vinhomes recorded outstanding debt of over VND 9,808 billion from bond issuances as of the end of December 2023.

As of the end of 2023, Vinhomes' debt-to-equity ratio was 0.31 times. The outstanding debt accounted for 12% of the company's total capital.

The fact that real estate businesses are quickly settling their debts amidst signs of cooling market interest rates has helped them reduce the burden of high interest costs incurred at the time of issuance.

In its February 2024 investment outlook report, VNDirect Securities Company suggested that the easing of bottlenecks is expected to help the real estate market recover starting from the second half of 2024.

"We believe that the residential real estate market has passed its most difficult phase and will show a clearer recovery from the second half of 2024," VNDirect's analysis team assessed .

Source: https://www.nguoiduatin.vn/ap-luc-tai-chinh-bua-vay-vay-no-cua-cac-cong-ty-bds-dang-nhu-the-nao-a650966.html