Hoa Binh Construction Group Corporation (HBC), chaired by Mr. Le Viet Hai, has just announced its consolidated financial report for the second quarter of 2023 and the first 6 months of the year. Accordingly, its after-tax profit in the second quarter increased more than 12 times, from nearly 45.2 billion VND in the same period to more than 546.3 billion VND.
Accumulated for 6 months, HBC's profit was more than 101.5 billion VND, much higher than the nearly 55.8 billion VND in the same period last year.
Hoa Binh Construction's strong increase in profits is considered boundless because over the past year, Mr. Le Viet Hai's business has gone from one difficulty to another, especially the prolonged "civil war"; there are still many receivables, while there are not many projects.
Along with that, the real estate market has been quiet for over a year, with few new projects starting. Public investment disbursement has not been as expected, and lending activities of the banking system have grown very slowly.
The reason Mr. Le Viet Hai's business has positive profits is thanks to restructuring activities, selling assets to restructure debt, to improve the financial situation and thereby be able to participate in construction projects.
In the second quarter, HBC recorded other income skyrocketing nearly 190 times from VND3 billion in the same period to VND569 billion, thanks to the liquidation and transfer of fixed assets of scrap materials.
During the period, Hoa Binh Construction approved a resolution to sell 100% of its capital at Matec Construction Machinery Company Limited (a subsidiary, managing and operating all of the group's machinery and equipment) and a part of the depreciated equipment to investor Ashita Group, for VND1,100 billion.
Thus, HBC's main profit comes from financial activities and business restructuring.
Regarding core operations, in the second quarter, HBC recorded a 45% decrease in revenue compared to the same period to below VND2,300 billion.
By the end of June 2023, HBC still had an accumulated loss of more than VND 2,020 billion.
Short-term receivables are still very large, more than VND 10,463 billion, of which nearly VND 3,796 billion is receivable according to the construction contract plan. By the end of the second quarter of 2023, HBC's provision for doubtful short-term receivables amounted to more than VND 2,386 billion. Total receivables account for 82% of Hoa Binh Construction's assets.
One point worth noting is that the "construction contract progress receivable" account is recorded at the same time as revenue. This item is used to record the percentage of work that Hoa Binh has completed and verified by a third party consultant, but has not yet invoiced to the customer.
HBC's large receivables are a bad sign for the company's cash flow and liquidity.
Stocks surge
Despite many difficulties, HBC shares have recently been on a recovery trend. In the session on July 28, HBC suddenly hit the ceiling price of VND10,000/share, along with Coteccons' CTD shares also increasing to the maximum allowed range.
Hoa Binh Construction and Coteccons' CTD are two enterprises in a consortium participating in the bidding for the largest package to construct Long Thanh Airport.
According to the announcement, there are 3 contractor consortiums submitting bidding documents for package 5.10 of Vietnam Airports Corporation (ACV) with a total value of more than 35,000 billion VND, including CHEC-BCEG-Vietnam Contractors Consortium, Hoa Lu Consortium and VIETUR Consortium.
In particular, the VIETUR Joint Venture is led by a contractor from Türkiye, with members being companies in the Newtecons ecosystem of construction tycoon Nguyen Ba Duong (formerly Chairman of Coteccons) and Vinaconex Corporation.
The CHEC-BCEG-Vietnam Contractors consortium is headed by a Chinese contractor. The Hoa Lu consortium is headed by a Vietnamese contractor, Coteccons, but has members including a Thai contractor and Hoa Binh Construction (HBC) of Mr. Nguyen Viet Hai.
Information about the winner of the 5.10 package has not been announced. But this is a factor that makes many people expect some infrastructure stocks, including VCG, CTD, HBC...
In the session on July 24, Vinaconex (VCG) hit the ceiling while CTD hit the floor, causing many investors to believe that the VIETUR joint venture won the bid. However, in the last session of the week, the breakthrough of the CTD-HBC pair made many people think the opposite.
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