Has the time for recovery arrived?

The bond market is gradually warming up.

According to VNDirect's Q3/2023 Bond Market Report, 88 domestic corporate bond issuances were successfully completed in Q3 2023, with a total issuance value of approximately VND 100,163 billion, nearly 2.6 times higher than the previous quarter and a 50% increase compared to the same period last year.

This includes 80 private placements with a total issuance value of VND 88,715 billion, accounting for 88.6% of the total issuance value. And 8 public offerings with an issuance value of VND 11,447 billion, accounting for 11.4% of the total issuance value.

Of these, real estate was the second-largest sector in terms of private placement corporate bond issuance in Q3 2023, with a total issuance value of approximately VND 29,593 billion, accounting for 33.4% of the total issuance value.

Looking back at the most difficult period for the bond market, April 2022 saw this fundraising channel hit its "bottom" with no bond issuances from real estate companies recorded.

However, statistics from the Hanoi Stock Exchange (HNX) show that in August 2023, there were 9 issuances from 7 real estate companies with a total issuance value reaching VND 23,000 billion - this figure accounts for about one-third of the total issuance value of the real estate sector in the first 6 months of 2023 (VND 62,512 billion).

September 2023 saw four more issuance rounds by companies in this sector. It's clear that fundraising activities by real estate companies are showing signs of renewed activity after a long period of inactivity.

Real estate companies that issued the most individual corporate bonds in Q3/2023 included: CAPITALAND TOWER Co., Ltd., which issued 4 tranches totaling over VND 12,200 billion with an interest rate of 1%/year and a 60-month term; Lan Viet Real Estate Co., Ltd. , which issued VND 4,100 billion with an interest rate of 13.3%/year and a 15-month term; and BIM Real Estate Joint Stock Company, which issued VND 2,333 billion with an interest rate of 10.4%/year and an 84-month term…

In a similar development, Ho Chi Minh City Infrastructure Investment Joint Stock Company (HoSE: CII) recently announced the offering of over 28.4 million bonds to existing shareholders.

The company expects to raise over VND 2.84 trillion if the issuance is successful, and the proceeds will be used to invest in bonds issued by its subsidiaries.

After requesting an extension of the maturity period for some of its bond issues, Khai Hoan Land Group Joint Stock Company (HoSE: KHG) also shared its plan to issue more bonds in the near future to raise up to 840 billion VND.

This increases the company's capital to contribute to several ongoing projects, with the remainder used to supplement the company's operating capital.

Stocks - a potential capital channel for real estate.

Not only through bond issuance, but in the third quarter of 2023, many real estate companies also made moves to offer shares privately, hoping to raise trillions of VND.

In parallel with raising funds through bonds, Khai Hoan Land also proposed a private placement of up to 180 million shares to professional securities investors, equivalent to 40% of its outstanding shares.

The planned implementation period is from Q4/2023 to Q1/2024. The offering price was set at VND 10,000 per share, higher than the true market value of the shares (closing price on October 11th at VND 6,300 per share).

According to the plan, the projected revenue of VND 1,800 billion will be contributed by Khai Hoan Land to its subsidiary companies to implement real estate projects and to supplement working capital. If the offering is successful, Khai Hoan Land's charter capital will increase from VND 4,494 billion to VND 6,294 billion.

Real estate companies are planning to raise trillions of dong through stock offerings.

At Dat Xanh Group Joint Stock Company (HoSE: DXG), this real estate giant also shared its plan to privately offer 57 million shares to foreign investors at an offering price of VND 15,000 per share.

If completed, Dat Xanh expects to raise VND 855 billion from foreign investors. The entire amount will be used to increase its ownership stake in Dat Xanh Services (HoSE: DXS) – a subsidiary of the company specializing in real estate brokerage and market research services.

Similarly, Licogi 13 Joint Stock Company (HoSE: LIG) also plans to privately offer more than 22.5 million shares to professional securities investors. The offering price is 10,000 VND per share, with a total expected proceeds of 225 billion VND.

The company plans to use the proceeds to invest in its subsidiaries and to supplement its working capital in order to repay bank loans, cover existing loan obligations, and cover other expenses.

Does the inflow of capital signal a recovery in the real estate market?

Speaking to Nguoi Dua Tin , Dr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association (VARS) - said that difficulty in accessing capital is one of the reasons why real estate businesses are in such a difficult situation today.

Mr. Dinh stated that real estate businesses are facing extremely difficult cash flow situations as major capital raising channels such as bank credit, bond issuance, or fundraising on the stock market are becoming increasingly challenging.

Although the State has issued many Circulars and Decrees to support real estate businesses in unlocking capital, according to Mr. Dinh's assessment, these mechanisms have not yet had an immediate effect in bringing money back to real estate; the market still needs more time to "absorb" the policies.

Using the analogy of a sick person, citing a report on the real estate market by VARS, businesses are currently assessed as not being provided with "cure," only being given some "nutritional supplements," meaning the "illness" cannot be cured. They can only "hold on and prolong their lives for as long as possible."

"What businesses currently need is the 'medicine'—early project approval, real money—to restore production, investment, and business operations. It's not just about transferring 'bad debt' from one time to another," Mr. Dinh said.

Dr. Le Xuan Nghia believes that the overall economy is still facing significant difficulties.

Regarding the capital market showing signs of renewed activity, Dr. Le Xuan Nghia, a member of the National Financial and Monetary Policy Advisory Council, believes that capital flowing into real estate is only "cautiously, tentatively, and gradually" recovering.

The actions of many businesses recently show that the government's efforts have had a certain impact on the market and on businesses, helping the real estate capital market gradually thaw.

However, the expert also noted that, compared to expectations, the capital market has only recovered about 30% because the overall economy is still facing significant difficulties.

According to Mr. Nghia's analysis, although the cash flow has returned, the turnover is very low, partly because the cash flow has not even completed one turnover in a year. Therefore, these developments are not indicators that the real estate market has recovered or is recovering.

Therefore, Mr. Nghia stated that the earliest the real estate market could gradually overcome its difficulties would be in the second quarter of 2024, thanks to the decisive intervention of the competent authorities .

Source: https://www.nguoiduatin.vn/doanh-nghiep-bds-ruc-rich-huy-dong-von-thoi-diem-hoi-phuc-da-toi-a630483.html