Bright prospect for Vietnam’s construction enterprises despite COVID-19 pandemic

Construction News Vietnam
A site run by construction firm FECON Corporation (FCN). FCN achieved contracted sales of VNĐ884 billion (US$37.9 million) in the first quarter. — Photo

Bright prospect for Vietnam’s construction enterprises despite COVID-19 pandemic

Despite the impact of the COVID-19 pandemic in the first quarter, construction businesses still firmly believe bright growth lies ahead for the rest of the year.

“The COVID-19 disease has significantly affected the economy as well as the construction industry, especially the tourism and resort real estate, however the industrial real estate area still expects good growth,” said Phạm Việt Khoa, Chairman of the Board of Directors of FECON Corporation (FCN).

FCN achieved contracted sales of VNĐ884 billion (US$37.9 million) in the first quarter. In March, contracted sales reached VNĐ234 billion.

Q1 profit was estimated at around VNĐ60 billion.

For construction businesses, profits are often reported higher in the last quarter of the year than the other quarters because this is usually the acceleration time for the handover of projects.

“In 2020 as well as in the next five years, two out of the five key business areas of FCN are industrial infrastructure construction and climate change prevention,” Khoa said.

In March, FCN signed many projects, including two in which the company participating as contractors are Vĩnh Tân port project in Đồng Nai province and Phước Đông Industrial Park Project in Long An province.

“Wind power, irrigation projects and landslide-prone projects are also the focused business of FCN over the next five years,” Khoa added.

“Profit is forecast to decrease in the first quarter of 2020 due to the impact of COVID-19, but the signing of new contracts is a bright spot, which creates motivation for construction enterprises in the next quarters,” he said.

In March 2020, the construction conglomerate Cotec Construction Joint Stock Company (CTD), signed two new high-class project contracts, raising the total value of contracted sales to more than VNĐ5 trillion in the first quarter.

The two projects are the Complex Building, covering an area of 8,320 square metres with 1,074 luxury apartments in District 1, HCM City and the Metropole Thủ Thiêm project in District 2, HCM City.

“This achievement was earned by concerted efforts of all leaders and employees, despite the common difficulties amid the COVID-19 pandemic,” said a leader of CTD.

Hoà Bình Construction Group JSC (HBC) had made efforts to expand the market despite difficulties caused by disease, participating in many projects including infrastructure projects abroad, with a total contract bidding value of more than VNĐ26 trillion so far, said Lê Viết Hải, HBC Chairman of the Board of Directors.

According to HBC, in 2020 profit earned from civil construction and industrial construction will account for 60 – 65 per cent, profit from infrastructure segment will gradually increase the proportion to 35 to 40 per cent.

In order to participate in the field of infrastructure construction, HBC has purchased a 57-per cent stake of the 479 Company – a unit separated from Cienco 4 Corporation, specialising in infrastructure construction, with experience in large-scale infrastructure projects throughout the country.

Xuân Mai Construction and Investment JSC (XMC) saw revenue and profit in the first quarter of 2020 decrease sharply compared to the same period in 2019, because many construction works had to be temporarily suspended due to COVID-19 pandemic.

In Q1, the company’s revenue was estimated at VNĐ175 billion, a half decrease compared to the same period last year.

On the stock market, stocks of the construction industry have declined sharply recently. Price-earnings (P/E) ratio is still lower than that in the period of 2016, according to Đào Hồng Dương, Director of Analysis at Petroleum Securities Company (PSI).

He added that the construction stock group would witness strong fluctuation in the months to come.

“This group is being negatively affected under pressure from foreign net selling,” Dương said.

“When the negative effects are over, construction stock group may recover stronger than the market average, especially when businesses begin to receive disbursed capital from public investment stimulus package,” he said. — VNS