Examining the assets of real estate tycoons amidst the economic downturn.

In a petition sent to the State Bank of Vietnam by the Ho Chi Minh City Real Estate Association (HoREA), HoREA stated that many real estate businesses, despite having large total assets and implementing measures to significantly reduce selling prices and increase discounts to 45-50%, are still facing challenges.

However, it remains very difficult to sell goods because there are almost no buyers, leading to cash shortages, negative cash flow, and severe liquidity problems that could result in the business "dying on a pile of assets".

Accordingly, the Association assessed 2022 as the most challenging year and 2023 as a crucial year for the survival of real estate businesses.

This is perhaps most clearly reflected in the first quarter 2023 financial reports of businesses, where the assets of many major real estate companies recorded significant fluctuations.

Inventory accounts for a large portion of total assets.

In terms of companies with significantly declining assets, the top spot probably belongs to Nova Real Estate Investment Group Joint Stock Company ( Novaland , HoSE: NVL), whose total assets as of March 31, 2023, reached over 256,000 billion VND, a decrease of 1,171 billion VND compared to the end of 2022.

Of that amount, short-term and long-term receivables totaled VND 96,635 billion, accounting for 38% of total assets.

Besides accounts receivable, inventory also accounts for a large portion of the company's asset structure, at VND 136,904 billion. Thus, accounts receivable and inventory alone account for approximately 90% of Novaland's total assets.

Of Novaland's inventory of VND 136.904 billion, VND 125.107 billion is real estate for sale under construction, VND 11.677 billion is completed real estate for sale, and VND 104 billion is real estate merchandise. Novaland did not provide detailed information in its report regarding the specific projects where the real estate for sale under construction is located.

However, the company stated that, as of March 31, 2023, Novaland's inventory was being used as collateral for loans totaling VND 58,686 billion, with total interest expenses capitalized during the period reaching VND 1,598 billion.

As a prominent company in the real estate market, Phat Dat Real Estate Development Joint Stock Company (HoSE: PDR) has also experienced a prolonged decline in its assets, falling from over 25,797 billion VND to approximately 21,758 billion VND since the third quarter of 2022.

In the first quarter of 2023, Phat Dat's asset structure saw a notable shift: accounts receivable decreased by over VND 1,000 billion, reaching VND 5,328 billion, accounting for 24.5% of total assets. Inventory also decreased slightly (by VND 50 billion), reaching VND 12,131 billion, accounting for 55.7% of total assets.

However, the company's cash reserves are only around 218 billion VND, and its asset structure remains primarily in inventory and accounts receivable. Inventory and accounts receivable currently account for 80% of Phat Dat's total assets, not far behind its "big brother" Novaland.

Not to be outdone by the big players in the industry, the Vietnam Construction Investment Development Corporation - DIC Corp (HoSE: DIG), despite experiencing a prosperous business quarter with a 10% increase in after-tax profit, saw its assets continue 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 this, inventory amounted to VND 6,037 billion, accounting for 43.7% of total assets; accounts receivable totaled VND 5,743 billion, a decrease compared to the beginning of the year but still accounting for 41% of total assets.

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

This marks the fifth consecutive quarter that the company has recorded a sharp decline in assets; the last time DIC Corp's total assets showed growth was in the fourth quarter of 2021.

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

Specifically, time deposits in banks with maturities of less than 3 months decreased to nearly 564.7 billion VND, compared to over 2,000 billion VND at the beginning of the year.

Inventory still accounts for the largest proportion of assets, exceeding VND 12,656 billion, mainly consisting of unfinished construction projects.

Specifically, over 5.405 billion VND is invested in the Khang Phuc Project – Tan Tao Ward Central Residential Area; nearly 3.300 billion VND in the Doan Nguyen – Binh Trung Dong Project; over 1.134 billion VND in the Binh Trung – Binh Trung Dong Project; and over 2.816 billion VND in other projects.

Maintain the upward trend.

Amidst a gloomy landscape with significant assets, the businesses under the VinGroup umbrella have stood out with impressive growth rates.

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

Vinhomes' total assets continued to expand by 4% in Q1 2023, reaching over VND 377,000 billion, of which short-term assets accounted for VND 205,327 billion.

While the entire market is struggling with inventory issues, Vinhomes comfortably reduced its inventory by VND 3,416 billion in one quarter, bringing it down to VND 60,946 billion. The total value of Vinhomes' inventory and short-term and long-term receivables currently accounts for approximately 53% of the company's asset structure.

However, it is noteworthy 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 in investments and bank deposits with maturities of less than 3 months, down VND 9,625 billion.

Besides Vinhomes, the owner of the Vincom shopping mall chain - Vincom Retail Joint Stock Company (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 VND 44,260 billion, an increase compared to the more than VND 42,700 billion recorded at the beginning of the year. Cash and cash equivalents reached nearly VND 7,300 billion, an increase of 4%.

Inventory as of the end of Q1/2023 was over VND 1,400 billion, mainly consisting of unfinished real estate for sale accounting for VND 1,399 billion (primarily construction and development costs for commercial townhouses for sale).

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

Real Estate - Examining the Assets of Real Estate Giants Amidst Crisis — Although many businesses reported asset growth, this was due to increased inventory and decreased cash.

An increase, but... in the wrong place.

However, an increase in assets is not always a positive sign.

Reporting a 50% decrease in profit, Nam Long Investment Corporation (HoSE: NLG) also announced its Q1/2023 financial report with assets slightly increasing compared to the beginning of the year to VND 27,264 billion, but this increase was mostly 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 VND 3,425 billion.

Similarly, the Industrial Investment and Development Corporation - JSC (Becamex IDC, HoSE: BCM) , despite a slight increase in total assets compared to the beginning of the year to over 48,589 billion VND, still reported a net profit after tax of only 74 billion VND, a decrease of 81%.

Notably, the cash and cash equivalents of this industrial real estate tycoon have also decreased by 60% to 436.2 billion VND.

Conversely, short-term accounts receivable from customers increased by 10% to VND 3,284 billion; inventory accounted for the majority of the asset structure at VND 21,356 billion (44% of assets), an increase of 2.3% compared to the beginning of the year; investments in associated companies amounted to VND 15,337 billion (31.5% of assets), a slight increase compared to the beginning of the year.

In today's environment where cash is king, the fact that many businesses report asset growth, but this growth is mainly in inventory while cash reserves have significantly decreased, is not necessarily a positive sign .

Source