"Examining" the assets of a series of real estate giants in the midst of extreme hardship

In a petition sent by the Ho Chi Minh City Real Estate Association (HoREA) to the State Bank, HoREA said that many real estate businesses, despite having large total assets, have taken many measures to deeply reduce selling prices and increase discounts by 45-50%.

However, it is still very difficult to sell products because there are almost no buyers, so businesses lack cash, have negative cash flow, and are seriously illiquid, which can lead to the situation of "dying on a pile of assets".

Accordingly, the Association assessed 2022 as the most difficult and severe year and 2023 as the decisive year for real estate businesses.

This is perhaps most evident in the first quarter 2023 financial reports of businesses when the assets of many real estate "giants" recorded strong fluctuations.

Inventory accounts for the majority of total assets.

In terms of enterprises with sharply declining assets, the leader must probably be No Va Real Estate Investment Group Corporation (Novaland, HoSE: NVL) when as of March 31, 2023, the total assets of the enterprise reached more than VND 256,000 billion, a decrease of VND 1,171 billion compared to the end of 2022.

Of which, short-term and long-term receivables recorded up to VND 96,635 billion, accounting for 38% of total assets.

In addition to receivables, inventories also account for a large part of the company's asset structure with VND 136,904 billion. Thus, receivables and inventories alone account for approximately 90% of Novaland's total assets.

Of Novaland's VND136,904 billion in inventory, VND125,107 billion is real estate for sale under construction, VND11,677 billion is completed real estate for sale and VND104 billion is real estate goods. Regarding which projects the real estate for sale under construction is located in, Novaland did not explain in detail in the report.

However, this enterprise said that as of 31/2023, the value of Novaland's inventory is being used as collateral for loans of VND 58,686 billion, the total capitalized interest expense during the period is up to VND 1,598 billion.

Also a "prestigious" enterprise in the real estate market, the assets of Phat Dat Real Estate Development Corporation (HoSE: PDR) have also had a rather long decline, falling since the third quarter of 2022 until now, from more than VND 25,797 billion to approximately VND 21,758 billion.

In the first quarter of 2023, Phat Dat's asset structure had a notable shift, with receivables decreasing by more than VND 1,000 billion, reaching VND 5,328 billion, accounting for 24.5% of total assets. Inventories also decreased slightly (down VND 50 billion), reaching VND 12,131 billion, accounting for 55.7% of total assets.

However, the company's cash is only about 218 billion VND, the company's asset structure is still mainly in inventory and receivables. The value of Phat Dat's inventory and receivables still accounts for 80% of total assets, not much less than its "senior" Novaland.

Not inferior to the big guys in the industry, Construction Development Investment Corporation - DIC Corp (HoSE: DIG) although experienced a prosperous business quarter with after-tax profit growing by 10%, but assets continued to decline.

Specifically, as of March 31, 2023, DIC Corp's total assets had decreased by more than VND 900 billion compared to the beginning of the year (from VND 14,748 billion to VND 13,826 billion). Of which, inventories were VND 6,037 billion, accounting for 43.7% of total assets; receivables were VND 5,743 billion, down from the beginning of the year but still accounting for 41% of total assets.

In addition, cash and cash equivalents decreased by 40 billion compared to the beginning of the year to more than 205 billion VND; short-term financial investments also decreased slightly to 177 billion VND.

This is the 5th consecutive quarter that the company has recorded a sharp decrease in assets. The last time DIC Corp's total assets recorded growth was in the fourth quarter of 2021.

Extending the list of declining assets, the total assets of Khang Dien House Investment and Trading Joint Stock Company (HoSE: KHD) as of March 31, 2023 were recorded at more than VND 20,747 billion, a slight decrease of 4% compared to the beginning of the year.

Of which, bank deposits with terms of less than 3 months recorded a decrease to nearly 564.7 billion VND, while at the beginning of the year recorded more than 2,000 billion VND.

Inventory still accounts for the largest proportion in the asset structure with more than VND 12,656 billion, mainly in unfinished real estate.

Specifically, more than VND 5,405 billion at Khang Phuc Project - Tan Tao Ward Residential Center; nearly VND 3,300 billion at Doan Nguyen - Binh Trung Dong Project; more than VND 1,134 billion at Binh Trung - Binh Trung Dong Project and more than VND 2,816 billion at other projects.

Maintain the momentum

Amidst a gloomy picture with remarkable assets, VinGroup businesses have emerged with impressive growth.

In terms of total assets, Vinhomes Joint Stock Company (HoSE: VHM) continues to hold the "throne" in the real estate industry.

Vinhomes' total assets continued to expand by 4% in the first quarter of 2023, reaching more than VND 377,000 billion, of which short-term assets accounted for VND 205,327 billion.

While the whole market is having a headache because of inventory, Vinhomes has stagnated, decreasing by 3,416 billion VND in one quarter to 60,946 billion VND. The total value of Vinhomes' inventory and short-term and long-term receivables currently accounts for about 53% of the company's asset structure.

However, it is worth noting that Vinhomes' cash and cash equivalents decreased significantly in the first quarter of 2023, from VND 10,816 billion to VND 1,889 billion. The largest decrease was recorded in investments and bank deposits with terms of less than 3 months, down VND 9,625 billion.

Besides Vinhomes, the owner of Vincom shopping mall chain - Vincom Retail JSC (HoSE: VRE) is also doing very well in maintaining the growth momentum of its assets.

At the end of the first quarter of 2023, Vincom Retail's total assets reached nearly VND44,260 billion, up from more than VND42,700 billion recorded at the beginning of the year. Cash and cash equivalents reached nearly VND7,300 billion, up 4%.

Inventory as of the end of the first quarter of 2023 was more than VND 1,400 billion, mainly real estate for sale under construction, accounting for VND 1,399 billion (mainly construction and development costs of commercial townhouses for sale).

As of March 31, 2023, Vincom Retail had a total of VND 701 billion in unfinished basic construction costs, of which, at Bac Ninh Hotel was VND 208 billion, Vincom Plaza Dien Bien project was VND 135 billion, Vincom Plaza Bien Hoa 2 project was nearly VND 136 billion and Vincom Plaza Dong Ha Quang Tri project was VND 127 billion.

Increase but... in the wrong place

However, increasing wealth is not always a positive sign.

Reporting a halved profit, Nam Long Investment Corporation (HoSE: NLG) also announced its financial report for the first quarter of 2023 with assets increasing slightly compared to the beginning of the year to VND 27,264 billion, but mostly due to an increase in inventory, reaching VND 15,681 billion and accounting for 57.5% of total assets.

Meanwhile, the company's cash and cash equivalents decreased by 9% to VND3,425 billion.

Or like the Industrial Development and Investment Corporation - JSC (Becamex IDC, HoSE: BCM) , although its total assets increased slightly compared to the beginning of the year to more than 48,589 billion VND, this enterprise still reported a profit after tax of only 74 billion VND, down 81%.

Notably, the cash and cash equivalents of this industrial real estate "tycoon" are also decreasing by 60% to VND436.2 billion.

On the other hand, short-term customer receivables increased by 10% to VND3,284 billion; inventories accounted for the majority of the asset structure with VND21,356 billion (accounting for 44% of assets), up 2.3% compared to the beginning of the year; investments in associated companies accounted for VND15,337 billion (accounting for 31.5% of assets), up slightly compared to the beginning of the year.

At a time when cash is king like today, the fact that many businesses announce that their assets have grown but mainly in inventory while their cash balances have decreased significantly is not necessarily a positive sign .

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