At the recent General Meeting of Shareholders, Truong Hai Auto Company (Thaco) suddenly announced that, in the new development strategy, the Company will move towards a super corporation model, with many different business sectors such as umbrella. automotive, logistics, retail, agriculture, real estate …
In particular, the real estate segment, more specifically the construction of infrastructure – urban – industrial areas will hold the second most important position in Thaco, only after the core segment is the automobile.
Pedals from Thu Thiem
To realize this strategy, since 2016, Thaco has increased its ownership in Dai Quang Minh Company to 90% of charter capital. So far, after the private placement, Thaco holds nearly 85% of the capital in Dai Quang Minh. This is an enterprise investing in many projects in Thu Thiem (District 2, Ho Chi Minh City). These include the project of 4 main roads of 11.9km long (with 10 bridges), pedestrian bridges, central plaza and river park (more than 27ha), Thu Thiem 2 Bridge (nearly 1.5km, 6 lanes), southern delta (more than 150ha), Sala urban area (106ha). Besides, Thaco is also developing the 650ha Chu Lai urban-industrial park as well as owning 100 showrooms with good locations in big cities.
With the above-mentioned abundant resources and land, in the coming years, THACO plans to participate in infrastructure investment through public-private partnership (PPP). In the immediate future, Thaco’s infrastructure projects such as 4 main roads, Thu Thiem 2 bridge are invested in the form of BT (build – transfer).
According to the share before the shareholders of Mr. Tran Ba Duong, President and CEO of Thaco, Thaco’s Sala Urban Project has completed phase 1 and handed over the house to the buyer. By the end of this year, Thaco plans to hand over many products of this urban area. This year, Thaco will also put into operation Thaco Sala – the first Grade B office building in Thu Thiem. The Thaco side hopes that the project will provide new options for offices for businesses wishing to move to the East.
Regarding the Southern Delta project (adjacent to Sala Urban Area), from 3 years ago, Dai Quang Minh was assigned by the People’s Committee of Ho Chi Minh City to develop the project to become an international eco-tourism destination with ecological forestry park (128ha), Research Institute (2.44ha), eco-resort (7.28ha), amusement park (8.18ha) and external traffic area (4.34ha). This is a highly social project. But so far, Dai Quang Minh has not made much move in this project. Similarly, in the main 4-way project Thu Thiem, there are still many unfinished items. The Company’s explanation of the ground clearance problems.
Although there are still sprawl, but since Thaco invested in Dai Quang Minh (2013), Thu Thiem’s face has changed. Thaco has more or less contributed to attracting investors to pour money into Thu Thiem. The evidence is that in Thu Thiem, besides Dai Quang Minh, there are also the presence of Lotte, Empire City, Sunshine Group, Quoc Loc Phat … In addition, land prices in many places in Thu Thiem have increased many times, up to hundreds of millions. copper per square meter.
Real estate has been a cornerstone for Thaco when car sales in 2017 decreased. Specifically, the real estate segment has helped Thaco to earn approximately VND 5,000 billion in revenue, nearly doubling over the previous year. In 2018, according to the report of SSI Retail Research, with the construction and handover plans, the net real estate revenue in 2018 is expected to account for 30-35% of Thaco’s total revenue, equivalent to 22,000 billion dong. Thaco also estimates that Dai Quang Minh will contribute VND 819 billion to net profit, which accounts for about 12-13% of Thaco’s expected full-year profit.
But for the time being, investors are somewhat unhappy when looking at Thaco’s Q1 / 2018 financial statements. Because the revenue of the real estate segment in Thaco reached less than VND 800 billion, a decrease of nearly half compared to the same period. Thaco did not have a detailed explanation of the decline in the real estate segment, but from a report of the Vietnam Real Estate Brokers Association, it can be seen that in the first quarter of 2018, the supply of apartments in Ho Chi Minh City increased in when transaction volume decreased (nearly 10% in the same period).
Particularly for Thaco, the time of handing over products, belonging to Sari Town, Sadora, Sarina … projects from the second quarter of 2018 onwards. But this plan may not be as smooth as expected if market factors and economic cycles are unfavorable. Thaco’s risk is also financial pressure. For example, to invest in the Sala Urban Area, the capital required is more than 2.2 billion USD. For infrastructure projects, investment capital is also up to tens of thousands of billion. Demand for investment forced Thaco to increase its debt. In 2017 alone, total long-term short-term debt increased by VND 3,600 billion.
Thaco is also at risk of resources and management, because its core is in automobile assembly and trading. Now encroaching on real estate, Thaco, although being a new name in the industry, will have to face fierce competition, gaining market share with heavy competitors, who have a position and experience in the real estate market. In particular, the East Saigon area, where Thaco is focusing its investment resources, is an area that most real estate development companies are looking at.
Thaco has considered many solutions. In terms of capital, THACO plans to issue 14 million shares (half for existing shareholders and half for employees) for VND 110,000 / share. Strategically, THACO is expected to develop from a joint point of view. joint venture, forming the entrepreneurship-business ecosystem of Vietnam to advance together. With these methods, Thaco hopes to control risks and achieve real estate growth as expected.
* Source: Investment bridge