When construction sector maintained its growth, will listed companies become better?

Posted: 27-11-2018

General Statistics Office of Vietnam said the construction sector in the first 9 months maintained a good growth rate of 8.46%. The listed construction enterprises also generated a growth in revenue.



According to Vietstock’s statistics, in the first 9 months of 2018, 122 listed construction enterprises generated VND 95,214 billion in revenue, up by 6.76% over the same period in 2017. However, net profit decreased by 26.5% over the same period, reaching only VND 5.375 billion.

In which, 98 enterprises reported profit; 19 enterprises suffered losses; 39 enterprises had growing profit; 68 enterprises had declining profit; 3 enterprises changed from loss to profit; 10 businesses from profit to loss and 4 enterprises have not announced financial statements of quarter 3/2018 including: HID, VMI, SDE and LTC.

Leading top net profit of the whole sector is still familiar contractors such as REE, HBC, CTD, etc. Vietnam Refrigeration Electrical Engineering Corporation (HOSE: REE) has maintained the profit of each quarter at least VND 200 billion in the last two years. In the first 9 months, REE's revenue reached 3,466 billion VND, slightly up 4% over the same period; Net profit was VND 1,233 billion, up nearly 19%. With this result, REE achieved 95% of the year profit plan.

Similar to growing and stable business results of REE, Coteccons Construction Joint Stock Company (HOSE: CTD) also maintained its position. In the first 3 quarters of 2018, CTD achieved VND 20,737 billion of net revenue and VND 1,192 billion of net profit. With the results achieved in the first 9 months, CTD achieved 79% of the net profit after tax plan.

Regarding the price fluctuation of CTD stocks in the market, although it has not found a satisfactory explanation for the declining CTD stock price, while the Company's business situation is stable and dividends are high, 50% in 2017. Specifically, in the past year, the market price of CTD stocks has decreased by about 32%. Since the beginning of March 2018, CTD stocks began to decline more clearly and traded below VND 180,000/stocks, sometimes dropped to VND 122,000/stocks (May 25) despite the peak of above VND 230,000/stocks.

Hoa Binh Construction Group Joint Stock Company (HOSE: HBC) is the 3rd highest net profit of the sector in the first 9 months with revenue of VND 12,768 billion and net profit of nearly VND 508 billion.

Notably, Hung Thinh Incons Joint Stock Company has just listed with a capital of only VND 250 billion but has been ranked among the top 10 most profitable enterprises in the construction sector. Specifically, in the first 9 months of 2018, HTN achieved revenue of VND 2,590 billion and net profit of VND 114.5 billion.

Top 10 enterprises with the highest net profit in 9 months of 2018. Calculation unit: billion Vietnamese dongs


Not in the top of enterprises with huge profits but SRA, PHC or CLG are names with outstanding profit growth. Sara Vietnam Joint Stock Company (HNX: SRA is a famous name in the market when its stocks continuously increased to the ceiling for a month since the end of July 2018. When learning about business results, SRA's profit changed dramatically starting from 2016 with VND 2.8 billion, while in 2015 it saw a net loss of over VND 500 million. Especially, in 2017, the number of its profit increased to over VND 11 billion.

Executive Board of SRA stated that this growth calculated by time is the result of changing business lines. Specifically, the Company has expanded its operations into selling medical equipment, linking medical socialization, environmental projects, and Japanese consumer products business projects.

Phuc Hung Holdings Construction Joint Stock Company also has high profit growth. In the first 9 months, PHC reached VND 1,940 billion in net revenue and VND 38.9 billion in net profit, equivalent to 45% and 135% increases over the same period, fulfilling 77.6% of revenue plan and 68.5% of net profit after tax yearly plan.

Revenue from construction and installation activities still plays a strategic role, bringing mainly revenue for PHC. In addition, in the third quarter, real estate business brought VND 13 billion to the Company, while the same period did not generate this revenue.

With VND 3.75 billion, net profit that Cotec Investment And Land-House Development Joint Stock Company (HOSE: CLG) achieved in the first 9 months is quite modest compared to other companies in the same sector. However, this result increased 105% over the same period.

This sweetness is probably still not enough when the acrid taste remains; the plan that General Director Nguyen The Thanh deemed “close to reality and almost firmly grasped in CLG's hands is only 49% implemented. Whether to complete the remaining half of the race in the last 3 months of the year is a big question mark.

Top 10 enterprises with the highest net profit growth in 9 months of 2018. Calculation unit: billion Vietnamese dongs


"Shortness of breath” of big man CII

In the first quarter of 2018, Ho Chi Minh City Infrastructure Investment Joint Stock Company (HOSE: CII) once shocked investors when it only reached VND 2.2 billion of net profit, while the figure in the same period was VND 1,227 billion. Shortness of breath in 1 quarter made CII lose its uptrend in the next quarters. As a result, in the first 9 months, net profit was over 95%, reaching over VND 70 billion.

Compared to its revenue plan of VND 6,300 billion and net profit of VND 1,210 billion approved by the 2018 Annual General Meeting, with its above results, CII only fulfilled 35% of its revenue plan and less than 6% of its profit yearly plan. CII also stated that the company only recognized its revenue when completing handover procedures to its customers so this time it is still impossible to conclude whether CII is able to complete its plan for the remaining quarter.

CII's subsidiary, CII Infrastructure Construction Joint Stock Company (HOSE: CEE), also did not achieve the expected results when the 9-month net profit dropped sharply by 82%. CEE said that in the first 6 months of the year, material prices increased while unit price of construction and installation contracts (provisional prices) has not approved. At the same time, business activities in both parent company and subsidiary faced difficulties, resulting in a decrease in semi-annual profit.

Top 10 enterprises with the strongest profit reduction in 9 months of 2018. Calculation unit: billion Vietnamese dongs


Long slips

Petrovietnam Construction Joint Stock Corporation (HNX: PVX) led the top loss of the whole sector. In the first 9 months of the year, the company had to do business under cost of capital, resulting in a net loss of over VND 100 billion. Not only the parent company but also most of PVX's subsidiaries and associates faced difficulties in the first 3 quarters. The accumulated loss amount as of September 30, 2018 of PVX is about VND 3,500 billion.

Not much better than PVX, Pacific Infrastructure Project Development And Investment Corporation (HOSE: PPI) also suffered from doing business under cost of capital. Meanwhile, lack of financial income and escalating cost forced PPI to report a loss of VND 8.3 billion in the third quarter and a loss of over VND 28 billion in the first 9 months.

Top 10 enterprises with the heaviest losses in 9 months of 2018. Calculation unit: billion Vietnamese dongs


6 units to early finish their target

Considering the progress of the plan, according to Vietstock's statistics, there are 6/122 listed construction enterprises exceeded the plan in the first 9 months, including: S99, VNE, MST, NHA, LHC and C47.

Vietnam Electricity Construction Joint Stock Corporation (HOSE: VNE) used to have a close shave when it only achieved 6% of its profit plan in the first quarter. However, after the first 3 quarters of the year, VNE has achieved more than 99% of its plan pre-tax profit and surpassed nearly 34% of its net profit after tax plan with VND 107 billion and more than VND 115 billion.

Although Construction Joint Stock Company 47 (HOSE: C47) is facing with the situation of interest rate eroding profit for many years, the business progress is still considered effective when surpassing nearly 5% of profit plan in just 9 months with nearly VND 23 billion.

However, the above result is compared with net profit after tax plan (NPAT) of VND 21.5 billion approved by the Annual General Meeting of Shareholders on April 22, 2018. The extraordinary General Meeting of Shareholders on November 24, 2018 adjusted its net profit after tax plan for 2018 to VND 100 billion. Therefore, if compared to the newly adjusted plan, C47 has only fulfilled 23% of profit yearly plan.

Top enterprises exceeded the plan in 9 months of 2018

* Compared with NPAT plan


Besides, there are many units that are very close to the whole year business plan after 3 quarters of implementation, such as SRA, REE, SC5, D2D, BAX , etc.

Top enterprises approached their plans in 9 months of 2018

* Compared with NPAT plan

On the contrary, there are quite a few businesses that step by step slowly and lag far behind enterprises in the sector. About 11 businesses have not achieved one-tenth of its yearly plan such as C92, DIH, UDC, L43, VXB, D11, AME, etc.

In 2010-2012 period, on average, Development Investment Construction Hoi An Joint Stock Company (HNX: DIH) earns VND 12 billion per year. However, since 2013, DIH's profit has slipped sharply; its profit has not surpassed VND 3 billion. In the last two years, the company did not complete its plan. Will this scenario be repeated in 2018 when DIH has achieved 2.8% of the yearly plan for the first 3 quarters?

Top enterprises far surpassed their plans after 9 months of 2018



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