Preliminary analysis of financial statements of nearly 1,600 listed enterprises on 3 stock exchanges in Vietnam (divided into 10 specific industries) from 2018 to the first 6 months of 2023 by the Private Economic Development Research Board (Board IV, under the Prime Minister's Advisory Council for Administrative Procedure Reform), has notable information.
Accordingly, revenue from all industries has decreased since mid-2022, most seriously in the real estate and construction industries. By the end of the second quarter of 2023, the situation has not improved.
Revenue in the first 6 months of 2023 of 8/10 industries was lower than the same period in 2022, only the information technology industry increased in scale, the consumer goods and services industry kept the same revenue scale compared to the same period.
The real estate market is still facing many difficulties. Photo: Lam Giang
Although listed, Vietnamese enterprises still have the characteristics of thin equity capital and operations relying heavily on borrowed capital. Therefore, when it is difficult to mobilize capital, enterprises will immediately encounter difficulties.
In the context of declining orders, difficulty in mobilizing capital through bonds and stocks; difficulty in accessing bank loans, cash flow becomes the most urgent problem for businesses...
A noteworthy information reported by Board IV is that construction and real estate enterprises have the biggest cash flow problem when the number of days receivable and the number of days of inventory increase many times. Specifically, the average number of days receivable of construction enterprises in the first quarter of 2022 was 463 days, but in the first quarter of 2023 it increased to 1,165 days.
Although this number will decrease to 598 days by the end of the second quarter of 2023, the cash flow pressure of construction enterprises is still very large. The average number of inventory days in the first quarter of 2023 is up to 4,527 days compared to 661 days in the same period last year.
"The average number of inventory days of real estate enterprises in the first quarter of 2023 also reached 5,662 days, with one enterprise having an inventory of up to 54,334 days and with the current sales situation, it will take this enterprise... 149 years to sell out its entire basket of products" - Board IV stated.
Although there is a lot of inventory, the profits of real estate businesses have decreased sharply due to the "freezing" of the market. The real estate industry's profits in the first 6 months of 2023 decreased by 27.3% compared to the same period last year. If excluding the Vingroup group's net profit (mainly Vinhomes' profit of up to VND 21,600 billion), the result decreased by up to 39.5%.
Faced with the difficulties of listed enterprises, Board IV recommends that immediate policies should focus on supporting cash flow through supporting access to capital; extending and reducing costs for enterprises.
It is recommended that the Government focus on implementing policies to help businesses access capital effectively; extend and reduce costs, and create short-term cash flow at least in the second half of 2023 (or the first half of 2024 depending on the delay of the policy). There needs to be a comprehensive approach to supporting businesses while also analyzing the problem for each specific industry and field to be effective.
Particularly for the real estate sector, the banking system can consider allowing businesses providing products in the segment serving essential and priority needs such as technical and social infrastructure, industrial parks, offices, etc. to extend debt and maintain debt groups according to Circular 02/2023/TT-NHNN of the State Bank.
Source: https://nld.com.vn/kinh-te/hang-ton-kho-cua-mot-cong-ty-bat-dong-san-uoc-tinh-149-nam-moi-ban-het-20231104090321748.htm
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