Real estate businesses still rely heavily on short-term loans, while project implementation is long-term – Photo: QUANG DINH
Which real estate companies have the highest debt?
In a recently released report on the residential real estate industry, Visrating – a credit rating agency with Moody's capital – said that in the first half of this year, total debt of listed investors increased by 19% compared to the same period last year.
The outstanding debt mainly comes from the development of new projects of some large real estate companies such as Vinhomes (total debt increased by 63% over the same period), Van Phu Invest (54%), DIG (59%), Nha Khang Dien (33%)...
Visrating experts predict that leverage will continue to increase, as developers raise more debt to finance new project development.
Data: Financial statements, TTO
However, on the positive side, debt repayment capacity is expected to recover slightly in the first 6 months of 2024, thanks to improved operating cash flow and cash resources.
According to Visrating, the industry's debt/EBITDA ratio (a financial indicator that reflects a company's profit before deducting interest expenses, depreciation and corporate income tax) increased to 3.7 times in the first 6 months of 2024, from 2.7 times last year.
Additionally, cash resources increased by 5%; operating cash flows recovered slightly but remained negative in the first half of 2024.
Data: Short-term and long-term debt based on financial reports of nearly 80 listed enterprises in the field of real estate management and development (mainly bank loans, bonds, financial leases, etc.)
Many investors have extremely weak debt repayment cash flow.
Also according to Visrating's report, more than two-thirds of listed investors have cash flow to repay debt from weak to extremely weak levels, specifically operating cash flow below 5% of total debt, especially investors affected by project legal issues such as LDG, Quoc Cuong Gia Lai (QCG) and Novaland (NVL).
Credit rating agency experts also pointed out that heavy reliance on short-term loans poses significant refinancing risks.
Not to mention, according to Virating, the ratio of short-term debt to total debt of listed investors remains high at 44% in the second quarter of 2024, in which companies with limited cash, for example: Kien Giang Construction Investment Consulting Group Joint Stock Company (CKG), Nam Bay Bay Investment Joint Stock Company (NBB), QCG, Kosy (KOS) have the highest recapitalization needs.
Data: BTC, TTO
In addition, data shows that there are about VND105,000 billion of real estate bonds that will mature in 2025. Visrating estimates that about 50% of investors' maturing bonds in the next 12 months are at risk of late principal/interest payments.
“Most of them are related to investors who have recently delayed principal/interest payments such as NVL, Sunshine, Van Thinh Phat and Hung Thinh,” the report pointed out.
Currently, real estate businesses mainly increase debt through issuing bonds, credit and stocks.
Of which, new real estate bond issuance in the first 8 months of 2024 decreased by 5% compared to the same period and is likely to remain low due to stricter issuance requirements and upcoming changes in the amended Securities Law.
Under the current draft law, proposed changes include mandatory collateral requirements for publicly issued bonds and private placement bonds being limited to institutional investors.
In return, investors' access to new capital improved in 2024, thanks to the growth of bank loans for real estate business and the issuance of shares doubled compared to the previous year, according to Visrating.
Previously, some experts also recognized that to promote credit growth in 2024 at 14-15%, an important part of capital will be absorbed into the real estate market - a field that requires large capital and is the main customer of many banks.
Source: https://tuoitre.vn/thay-gi-khi-khoi-no-dai-gia-bat-dong-san-phinh-to-20240925194935178.htm
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