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Van Phat Hung Real Estate Has Not Been Able To “Prosper”

Van Phat Hung real estate has not been able to "prosper"

End of the project, business cash flow was negative nearly VND250 billion, leading to doubts about the ability to operate continuously is the current status of Van Phat Hung Joint Stock Company.

Dead by the bubble

Van Phat Hung Joint Stock Company was established on 9 September 1999 by Mr. Tran Van Thanh and Vo Anh Tuan with charter capital of VND135 billion. According to Phu My Hung urban area, Van Phat Hung has created a name with the development of a series of residential areas in Saigon South. Typically, Phu My residential area is 22ha, Phu Xuan residential area is nearly 37ha, Phu Thuan residential area is nearly 4ha, Nhon Duc residential area is 40ha, La Casa complex …

Thanks to the participation in real estate market from early Van Phat Hung has accumulated cheap land fund. Since then, we have achieved very good business results. Specifically, in 2008 this company net profit of VND28 billion. 2009 saw a surge in business with the turnover of nearly VND942 billion and after tax profit of over VND86 billion.

Van Phat Hung real estate has not been able to "prosper"
Van Phat Hung sold the remaining seven blocks of La Casa project to An Gia Investment

However, the property market began to plummet in 2008 when the bubble occurred. Van Phat Hung is not out of the rule and has a net loss of nearly VND11 billion. For the period of 2011 – 2014, the company must operate in a layered manner. In 2014, when property market recovery, revenue of Van Phat Hung is only VND280 billion and net profit is about VND3 billion.

The property market through the crisis period but Van Phat Hung still not raised up due to lack of project pillars. The residential areas that the company has been handed over and sold in 2009. At present, Van Phat Hung has only three projects are La Casa, Nhon Duc residential area and Hoang Quoc Viet apartment.

In the beginning of 2017, La Casa Complex was completed by Van Phat Hung and was sold to An Gia Investment for VND910 billion. Nhon Duc Residential Area has an area of over 40ha and is located in Nha Be. Due to lack of money to compensate and invest in infrastructure, Van Phat Hung had to postpone the sale of this project from 2012 until now.

After that, the company had to sell 30ha of Nhon Duc project to HCMC University of Physical Education and Sport and Ho Chi Minh City University of Natural Resources and Environment. Only Hoang Quoc Viet apartment is under construction and is expected to be handed over later this year. However, after this apartment, Van Phat Hung is no longer any project.

It is difficult to escape the crisis

In early 2017, Van Phat Hung sold seven blocks of the La Casa project to An Gia Investment. This has earned the company VND910 billion and profit after tax is expected VND325 billion.

However, the audited 2016 financial statements audited by RSM Vietnam Audit and Consulting Co., Ltd. stressed that net cash flow from business activities of Van Phat Hung was negative of nearly VND 248 billion. This has led to considerable doubts about the company’s continued viability.

Van Phat Hung real estate has not been able to "prosper"
Handing over Hoang Quoc Viet apartment at the end of this year, Van Phat Hung will run out of projects to implement

Truong Thanh Nhan, General Director of Van Phat Hung Corporation, said that net cash flow from trading activities was mainly due to the proceeds from the transfer of part of the Nhon Duc project of the University of Natural Resources Environment of Ho Chi Minh City is slow. The remainder from the transfer of block 2 and block 5 of the remaining La Casa project and the contribution of investment capital for business cooperation.

In addition, the company has successfully signed three transfer contracts block 3, 4, 6 and trade services in La Casa with a total value of more than 910 billion VND that most of the revenue of these contracts will be collected in 2017.

Therefore, Van Phat Hung said that the company’s net negative cash flow from business activities at the end of 2016 will not significantly affect the company’s ability to operate continuously.

However, in FY2014 and FY2014, Van Phat Hung’s revenue was boosted by the handover of blocks of 1A and 1B of La Casa. Due to the high cost of development in the early stage and the market crisis, the gross margin was very low. The money from the project is just enough to offset the operating costs of the business.

Though audited by the auditing company, 2017 will be the year Van Phat Hung has good business results when the two projects La Casa and Hoang Quoc Viet apartments are recognized revenue with profit.

However, the problem of Van Phat Hung is still lack of project and no specific plans for an increased land fund. Therefore, Van Phat Hung can not ” prosper “.

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