Positive signals for construction businesses

Reduce the difficulty

Representatives of many construction enterprises shared that when real estate project investors encountered difficulties, the business activities of civil construction contractors were immediately affected. However, with changes in business strategies such as shifting to public investment projects and industrial construction, business results have been less difficult.

A project built by Coteccons Construction Joint Stock Company. Photo: Tran Dung

A representative of Coteccons Construction Joint Stock Company informed that in the first quarter of the 2024 - 2025 fiscal year (July 1, 2024 - September 30, 2025), revenue was recorded at VND 4,759 billion, up 15.4% and profit after tax was VND 93 billion, up nearly 40% over the same period. Gross profit margin improved from 2.4% in the same period to 4.3% this quarter. Enterprise management costs increased by 42% mainly due to increased staff costs, while the provision for bad debts has begun to be reversed in this quarter.

Although no longer having to make provisions in the first quarter, as of the end of September, Coteccons still had to make provisions for bad debts of VND1,429 billion. Some companies with high bad debt balances with Coteccons such as Ngoi Sao Viet Real Estate Investment Company Limited - a member unit of Tan Hoang Minh, Saigon Glory Company Limited, Minh Viet Investment Joint Stock Company,... in which, the bad debt of VND143 billion of Saigon Glory just appeared in the report of the last quarter of last year and had to make 100% provision. Meanwhile, the bad debt with Tan Hoang Minh comes from projects handed over before 2020.

From the beginning of fiscal year 2025 to the present, Coteccons and Unicons have won bids for many large-scale projects in the fields of civil, industrial and infrastructure, with a total value of up to 10,300 billion VND, creating a solid momentum to complete the production and business goals of the next period. Notably, the repeat sales rate/total number of winning projects is up to 69% with a series of projects of Sun Group; Ecopark Group; BWID project; VinFast...

It can be seen that Coteccons has made an important shift in its business strategy, especially in expanding its revenue structure to the industrial construction sector. This shift is bringing many “sweet fruits”, especially in the context of slow recovery of civil real estate. The international customer and partner files are assessed to have a superior financial situation compared to current domestic project owners, bringing in a steady source of income and low risk of bad debt.

Another construction company, Hoa Binh Construction Group, despite a dismal business quarter with net revenue down 48% year-on-year to VND975 billion. After deducting cost of goods sold, gross profit was VND60 billion. BIDV's regular credit extension with a maximum limit of VND4,000 billion is also an important driving force for Hoa Binh Group to expand its business activities.

With the addition of senior personnel with international experience, a representative of Hoa Binh Group said that it is gradually realizing its vision of becoming one of the leading construction corporations in the region. This contractor is comprehensively restructuring, perfecting its human resources, optimizing management costs, and restructuring assets through divesting ineffective subsidiaries and affiliates.

The recovery process will gradually become clear.

Industry experts believe that the construction market by the end of 2024 will maintain a stable growth rate, but there will be a certain slowdown due to factors such as capital difficulties, material price fluctuations and credit policies.

However, the trend of developing green, sustainable and technologically applied buildings will create great opportunities. Policies supporting social housing, urban infrastructure development and redevelopment of old urban areas will also be the driving force for the development of the civil construction market in the near future.

Regarding urban infrastructure development, the North-South high-speed railway project promises to have a positive impact on economic development. With a total estimated investment of about 67.34 billion USD, the project will expand development space, creating the premise and driving force for many industries such as construction, materials, etc.

Chairman of the Vietnam Association of Construction Contractors Nguyen Quoc Hiep said that the North-South high-speed railway project will cost more than 33 billion USD in construction and installation. Vietnam has never implemented a project with such a large capital and scale. Therefore, this could be an opportunity for construction contractors to "change their skin".

If the high-speed railway system is still considered as a tunnel, a cable-stayed bridge, etc., then in recent times, Vietnamese contractors have made remarkable progress and can carry out all of the above projects. However, frankly speaking, with the North-South high-speed railway project with a speed of 350km/h, the accuracy related to speed requires a different level of technology, so we cannot be subjective. Vietnamese contractors need to be aware that this is a new technological battlefield that requires learning and absorbing the most advanced knowledge about construction for application.

"With the current capacity and level of Vietnamese enterprises, they can completely handle the technology and construction. The issue that needs attention now is the labor force. Currently, existing projects, including the expressway project, are seriously lacking in human resources, especially direct construction workers. Therefore, it is also necessary to calculate to have enough labor force to implement the construction project" - Mr. Nguyen Quoc Hiep said.

As for the market, when real estate develops strongly, the demand for construction materials will increase, with gradually positive developments, it is completely possible to affirm that real estate has passed the U-shaped bottom and is growing again along with the increasing interest from investors and customers... This creates a changing market context, but in reality the market still has many potential difficulties.

Real estate investors (mainly real estate development companies) will decide to build projects based on the needs and potential of the real estate market. When the real estate market has the potential to generate profits, investors will pour money into building projects such as apartments, villas, urban areas, industrial parks, offices for rent, etc.

According to Dr. Nguyen Van Dinh - Chairman of the Vietnam Real Estate Brokers Association, from now until the end of 2024, the recovery process of the real estate market will be clearer, but it cannot "breakthrough" because there is differentiation by segment and region. However, when investors are given more confidence, it will promote the flow of money into real estate.

According to CBRE Vietnam, 2025 is the first year of the new real estate cycle, the market is still following the recovery trend but the speed is similar to 2024. The North becomes the core of the new cycle when the supply continues to be high, from 25,000 - 30,000 products; Ho Chi Minh City is quite modest with 7,000 - 8,000 products. The price will maintain the upward trend because the main problem of the market is supply, while in the short term, the relief of supply pressure has not made a strong breakthrough. Regarding the absorption level in the market, demand is at a good level.

 

Capital for civil construction projects, especially in the housing segment, will still face many difficulties. Although the Government has support policies, access to credit remains an important factor affecting the market. Banks may maintain high interest rates to control credit risks, causing difficulties for businesses and home buyers.

Deputy Director of Hoa Thanh Building Investment and Construction Company Limited Dao Duc Thanh

Source: https://kinhtedothi.vn/tin-hieu-khoi-sac-cho-doanh-nghiep-xay-dung.html