What Do You See From The Debt Of A Billion Of Property Companies?

Thousands of billion-dollar loans to the original debt settlement make companies struggling to balance cash flow and ensure profits.

Debt thousands of billions

At present, total outstanding loans of property companies account for 64% of assets. Inventory value increased by 15%, at over VND105 trillion. The actual situation in each business is also alarming when the liabilities payable in 2017 and 2018 are very large.

For example, Hoa Binh-HBC Construction and Real Estate Corporation will pay a total of VND2,719,542,448,579 in 2017. This is the amount that HBC borrows from banks, borrows from other parties and long-term loan to pay

What do you see from the debt of a billion of property companies?

HBC will pay a total of more than VND2,719 billion in 2017.

Specifically, HBC must pay Vietinbank a branch of more than 1,011, the deadline is June 28, BIDV branch in HCM City near VND729 billion on 23/5, Standard Chartered Bank Vietnam Branch Hanoi Over VND276 billion on May 4, Vietcombank HCM City branch is over VND242 billion on June 20, MBbank Ho Chi Minh City branch is over VND45 billion on May 20, NCB bank headquarters at VND26 billion . On 4/5, VIB bank branch in District 1 more than VND20 billion on May 22nd.

Under contract No. 26/2012 HDTD-NDL with Vietcombank District 1, HBC must pay an additional 1,903,003,860 on 25/7/2017. This loan is used to purchase machinery and HBC has to pay basic interest plus 4.5% per annum. This is one of the six contracts that Vietcombank’s branch in District 1 loans to HBC totaling nearly VND75 billion to buy machinery.

By the year 2018, HBC’s repayment pressure is not small with nearly VND400 billion. In particular, Maritime Bank HCMC branch with 3012/2016 / HDDCV loan contract VND140 billion and loan contract 194/2015 / HDDCV VND40 billion to make the project Grand Riverside. NCB branch of Sai Bank, HBC under loan contracts No. 636/14 / HDTD / 101-11 nearly VND157 billion for the project The Ascent and contract loan 298/2016 / HDTD / 101-40 nearly VND32 billion for the Soho Riverview project.

Meanwhile, Nam Long Investment Joint Stock Company had to repay short-term loans of nearly 354 billion dong. In particular, Nam Long loans from personal loans amounted to VND70 billion to supplement working capital and pay on 9/12. In November, Nam Long paid HD bank VND13 billion. In January  2017, the company paid VND57 billion dong to OCB and in March 2017 paid VND8 billion to Agribank.

In addition, Nam Long will pay 350 billion dongs of convertible bonds to OCB on 28 July. This money is used to finance Ehome projects. This bond was issued on 28 April, 2014.

What do you see from the debt of a billion of property companies?

HBC borrowed VND 157 billion under contract No. 636/14 / HDTD / 101-11 to build The Ascent project

Meanwhile, the Novaland Group has the short-term debt of VND5,595,769,743,653. This is a loan in 2015, 2016 and has a loan period of 12-24 months and Novaland pay this year and 2018.

Khang Dien Housing Investment and Trading Joint Stock Company has the short-term debt of VND1,669,929,119. Ha Do Group Corporation has nearly 10 billion bad debts over three years. Inventories in 13 projects of Ha Do reach VND2.389 billion and short-term debt is over VND126 billion. Conteccons Construction Joint Stock Company has short-term debt VND5.507 billion. The Novaland Group has to pay a short-term debt of VND97.628 trillion.

Easy to lose liquidity

According to the Vietnam Real Estate Association, real estate accounts for 20% of the total social investment. Real estate lending interest rates from credit institutions range from 9-11%, depending on duration and subject. Leaders of many real estate companies said that the interest rate is too high for.

Although the market is good the price of products is very competitive so the profit margin of real estate companies is only about 10%. With interest rates up to 9-11% with a profit margin of about 10%, the loan accounted for most of the profits of investors.

Vietnam Real Estate Association also said that the real estate companies in Vietnam are under pressure to repay the bank due to lack of financial resources. Equity is too small for investment. Currently, bank loans are still the mainstay of real estate firms. Specifically, own capital of enterprises only accounts for 16.7%, capital mobilized from customers is 23.8%, the rest is credit loans 59.5%.

What do you see from the debt of a billion of property companies?

HBC borrowed VND40 billion from the bank to cooperate with Hong Ha Investment and Trading Joint Stock Company for the Grand Riverside project

Most banks offer loans from 2 to 5 years. The borrower must mortgage the land use rights and the apartment formed from the loan. Longer the loan, the higher the risk. Businesses also face a burden on interest rates.

The problem faced by property firms is not only the pressure to pay but also the excess inventory. For example, the total value of inventories of enterprises has increased by 15% in 2016, at more than 105,000 billion. In particular, Novaland has VND15.795 billion inventory.

In addition, Khang Dien is VND4,672 billion, Ha Do has VND2,442 billion, Hoa Binh has VND1,245 billion, Sacomreal has 3.606 billion, Nam Long has VND3.698 billion, Conteccons has VND1,240 billion inventory.

The director of a real estate business in Ho Chi Minh City said that at any time, the pressure to repay interest and loans is always very large with real estate companies. In the past three years, the real estate market has grown so well that banks are easy to lend. Currently, credit is tight with the real estate sector, so it is very difficult for businesses to turn their cash flow into new projects and maturing banks.

“Credit squeeze in the real estate and real estate markets is leveling off, making real estate companies look for different ways to revolve their cash flow, such as raising chartered capital, working with water funds. out. However, not all companies are successful so the loss of liquidity with real estate business is very likely to happen in the future.

Economic expert Nguyen Tri Hieu said that there are two criteria for assessing the health of an enterprise: inventory and debt.

“As inventories and liabilities increase, businesses will not be able to sell. When the market is good, these two indexes decrease and vice versa, “Mr.Hieu said.

Mr. Hieu also said that when the debt is too large compared with the ability to pay will lead to the possibility of default. The outstanding debt of a business that is three times more than the equity, the more outstanding the debt.

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