The property developer aims to raise its charter capital from $65 million to $109 million this year as it is seeking to accumulate land fund.
At the recent meeting, Hai Phat Invest (HPX) provided a lot of information related to its schedule of listing on Ho Chi Minh City Stock Exchange (HOSE).
Although no specific date was disclosed, HPX said the appropriate time will be the end of June or early July this year. Preparations for HPX’s listing were started three years ago.
Late last year, Dragon Capital entered into a contract with HPX to become a strategic shareholder holding a 15-per cent stake in the company.
The listing of HPX is aimed at calling for investments. According to HPX, its land fund is sufficient to carry out projects over the next 15 years and the company needs additional funds for project development.
The company’s charter capital increase to $109 million in 2018 is expected to be implemented into two phases. In the first phase, the charter capital will be increased from $65.8 million to $87.8 million from the surplus capital source. In the second phase, the charter capital will be raised to $109 million through issuing shares separately.
In addition, HPX will issue five-year bonds, with a total issuance value of VND1 trillion ($43.9 million).
HPX’s plan to increase its charter capital is to support HPX in implementing land development projects, which require a large initial investment.
Besides calling for investment, HPX will also restructure its debts from short-term debts to medium and long-term debts. This, according to the company, helps avoid debt pressure as well as conforms to investment projects.
Hai Phat Capital and Cienco 5 will be merged
Established in 2003 with charter capital of only VND8 billion ($351,339), after 15 years, HPX has rapidly grown into a notable name in the real estate market. HPX’s strength is that it holds a large number of housing projects through M&A deals, co-operation, transfers, and auctions.
HPX now has more than 30 big and small projects in many cities and provinces of the country. Some of HPX’s prominent projects include The Pride, Tan Tay Do, Roman Plaza, etc., focusing on the mid-end real estate segment.
HPX sets the ambitious business goal after listing. By 2020, HPX sets a revenue target of VND5.5 trillion ($241 million) and after-tax profit of VND950 billion ($41.7 million).
In 2018 alone, the company targets the net revenue of VND3.2 trillion ($140 million), doubling over that of 2017. Revenue will be generated mainly from projects of The Vesta (VND1,756 billion or $77.1 million), Phu Luong new urban area (VND1,159 billion or $50.9 million), Roman Plaza (VND726 billion or $31.9 million), and Trau Quy (VND219 billion or $9.62 million).
HPX targets a net profit of VND450 billion ($19.7 million) in 2018. This target is quite high because HPX only recorded an after-tax profit of VND180 billion ($7.9 million) in the first six months of this year.
However, Doan Hoa Thuan, Deputy General Director of HPX, said that the company is still confident to achieve its goals with the support of merger plans of its subsidiaries.
At present, HPX is planning to merge Hai Phat Capital, which is well-known for revival of Usik City project and is implementing two projects, namely HPC Landmark and Hanoi Homeland. HPX now holds a 14 per cent stake in Hai Phat Capital. In addition to the shares held by HPX’s Chairman Do Quy Hai and relevant individuals, HPX's shareholding in Hai Phat Capital is about 60 per cent. This year, HPX will acquire the remaining 40 per cent stake in Hai Phat Capital to turn Hai Phat Capital into a subsidiary.
Another company that will be merged is Cienco 5. At present, HPX holds a 60 per cent stake in Cienco 5 and expects to acquire the remaining 40 per cent stake to consolidate revenue and profit into the financial statements. In addition, HPX will also divest from Hai Phong Real Estate.
Hai stated that in the future, HPX may participate in Hai Phat Land's capital raising process and will hold at least 51 per cent stake in this company. Hai Phat Land is currently the fourth biggest real estate broker in Vietnam with the strength of project land distribution.
Expectations are put on resort real estate
A significant portion of HPX's revenue in the period from 2020 onwards is forecasted to come from the resort real estate sector when the projects surrounding Ha Dong district, Hanoi will have been completed. Currently, the company has some land lots in the tourism areas such as Thuan Phuoc project (Da Nang), TM1 Con Tan Lap project (Nha Trang), Ham Tien (Mui Ne).
According to HPX, the projects will contribute significant revenue to the company in the coming time. For example, Ham Tien project covering an area of 198 hectares is likely to bring total revenue of over VND5 trillion ($219 million) to HPX in the period from 2020 to 2022.
Thuan said that the advantage of HPX’s resort projects is that the land fund is reasonably priced. Specifically, in the TM1 project in Nha Trang, the land price has reached to VND250 million ($10,979) per square metres, higher than that paid by HPX (nearly VND200 million or $8,783 per square metres).
Similarly, with the Ham Tien project, HPX's site clearance costs VND1 billion ($43,917) per hectare while the current price of project land is several times higher than this figure. The company said that the 198ha-land will certainly become a good income-generating project for HPX once the surrounding infrastructure is deployed better.
The company’s leaders emphasized that, despite investment in coastal projects, HPX is aiming at long-term proprietary products rather than competing with rivals in terms of leisure resorts. Thus, these products are not much different from those HPX has introduced to the market so far.