How is HUD doing?

Housing and Urban Development Corporation - LLC (HUD) has just announced its semi-annual consolidated financial report for 2024 with positive business results. Specifically, the company's net revenue reached nearly VND 1,792 billion, double that of the same period last year. Profit after tax reached VND 136.7 billion, up 63% over the same period in 2023.

However, the business results of this corporation have been on a downward trend since 2017. Data shows that in 2017, this unit recorded a net revenue of more than 6,182 billion VND, with a profit after tax of 457.5 billion VND. However, by 2023, net revenue and profit decreased to only 2,277 billion VND and 166.3 billion VND, respectively.

After-tax profit margin will decrease from 7% in 2017 to only 3-5% in the period 2018-2022. This profit margin will improve to the old level in 2023 and reach 8% in the first half of this year.

Financial statements show that the company's profits mainly come from production and business activities. Profits from financial activities as well as other activities are insignificant.

In the first half of this year, HUD's real estate business flourished, reaching VND1,475.2 billion (contributing more than 82% of net revenue), 2.7 times higher than the same period in 2023. Net revenue from sales activities also reached VND209 billion, 5 times higher than before. However, revenue from providing services decreased sharply from VND220.5 billion to VND51 billion.

As of June 30 this year, HUD's total assets were nearly VND15,123 billion, up 11% compared to the beginning of the year. Of which, short-term assets were VND11,982 billion, accounting for 79.2% of total assets. Long-term assets accounted for only nearly 21%.

The largest proportion of short-term assets is inventory with a value of VND9,495 billion, up 19% compared to the beginning of this year. The company said that some assets formed in the future such as the HUD Building office building in Long Bien district are mortgaged to secure long-term loans at BIDV Hanoi branch.

On the other side of the balance sheet, liabilities accounted for 75.6% of the company's capital as of June 30. Most of which was short-term debt, at nearly VND5,320 billion, up 40% compared to the beginning of the year. Notably, taxes and other payables to the State skyrocketed from nearly VND77 billion to VND1,595.4 billion in the middle of the year, mainly due to increases in real estate taxes and land rents.

HUD's property taxes and land rents skyrocketed in the first half of the year (Source: Financial Statements).

The company has financial debt of more than VND 3,973 billion, mainly long-term loans (VND 2,125 billion). The largest long-term loan at BIDV Hanoi branch is VND 819 billion. These loans are used to pay for investment costs of the An Sinh housing project (Binh Duong), the Thanh Lam - Dai Thinh 2 new urban area infrastructure construction project (Hanoi), and the Dong Tang Long new urban area (HCMC).

In terms of capital structure, HUD has a high debt to equity leverage ratio, maintaining at 2.5 times at the end of the 2017-2022 period. By the end of 2023, this ratio will increase to 2.7 times and by mid-2024 to 3.1 times.

Housing and Urban Development Investment Corporation is a state-owned enterprise under the Ministry of Construction with the main business lines being investment in the development of new urban areas and housing, and real estate trading. Some projects developed by HUD include Dinh Cong new urban area, Phap Van new urban area, and Viet Hung new urban area.

Source: https://dantri.com.vn/bat-dong-san/hud-dang-kinh-doanh-ra-sao-20240916101727030.htm