Financial revenue - a bright spot for real estate enterprises

DNHN - Financial revenue in the second quarter of 2024 has been an important bright spot, helping many real estate businesses maintain positive profits despite challenges from their core business activities, contributing to their financial stability.

In the first half of 2024, the real estate market witnessed encouraging recovery, with the launch of many new housing projects and a transaction rate exceeding 70%. Apartment prices in the two major cities of Hanoi and Ho Chi Minh City continuously set new record highs. According to a report from the Vietnam Real Estate Brokers Association, the primary market successfully saw 20,600 housing units transacted, three times more than in the same period last year.

However, even though the market has passed through a difficult phase, many challenges still remain. Despite signs of recovery in the macroeconomy, real estate businesses continue to face financial health difficulties, slow policy resolution, and unclear future prospects. The Q2 2024 financial reports of many real estate companies show that financial revenue plays a crucial role in maintaining positive profits, even though the overall situation remains challenging.

Amidst the difficulties faced by the real estate market, financial revenue has emerged as a prominent bright spot for many real estate businesses. This primarily stems from financial revenue providing a stable income source, helping these companies overcome challenges from their core business activities. For instance, profits from investments, share transfers, or lending often bring significant returns, offsetting the decline in revenue from real estate sales.

Many real estate enterprises, such as Binh Duong Business and Development JSC and Nam Long Investment Corporation, have taken advantage of financial opportunities to maintain financial stability. The strong increase in financial revenue has helped them improve their operational results while the main market faces difficulties. Specifically, profits from investments or asset transfers can yield gains even when primary sales revenue declines, highlighting the crucial role of this income source in maintaining the financial sustainability of companies.

Moreover, financial revenue helps real estate businesses maintain liquidity and the ability to continue operations during difficult times. With revenue from financial activities, companies can improve their financial situation, invest in new projects, or sustain the operation of current projects without relying entirely on real estate sales revenue. Thus, financial revenue not only helps real estate companies get through tough periods but also creates opportunities for recovery and sustainable development in the future.

Notably, Phat Dat Real Estate Development Corporation (HoSE: PDR) is another example of reliance on financial revenue. PDR's net revenue in Q2 2024 was only 8.25 billion VND, but the company recorded a net profit of 49.7 billion VND thanks to financial revenue, especially from the transfer of linked shares, which amounted to nearly 202.5 billion VND.

The Vietnam Exhibition Fair Center (VEFAC, UPCoM: VEF), a subsidiary of Vingroup, also relies on financial revenue to sustain its operations. In Q2 2024, VEFAC reported financial revenue exceeding 148 billion VND, primarily from lending and investment profits. As of the end of the first six months, total revenue reached 545 million VND, with post-tax profits of over 200 billion VND.

Other cases, such as Novaland Investment Group Corporation (HoSE: NVL) and An Gia Real Estate Investment and Development Corporation (HoSE: AGG), also show reliance on financial revenue in recent times.

According to an analysis by Yuanta Vietnam Securities Corporation, the cash flow of many real estate companies is still negative due to difficulties in clearing inventory. Companies often have to divest or transfer assets to improve cash flow. The recovery of the real estate market and the effective implementation of policies are necessary to promote positive changes in the industry.

Therefore, the ability of real estate companies to raise capital remains limited. Although the corporate bond market showed signs of improvement in Q2 2024, bond issuance still faces challenges due to investor confidence not yet fully recovering.

Nhan Ha