Ho Chi Minh City Infrastructure Investment JSC (CII), partner of Hong Kong Land in a residential development in the second city, has experienced one of the most difficult years in its history.
The company's recent annual general shareholders meeting heard that its revenue last year met 46 per cent of the yearly plan, reaching about $116 million, while its earned a modest profit of $4.1 million, or equal to just 8 per cent of expectation.
The poor performance was caused by hiccups in the execution of various infrastructure projects.
Firstly, CII could not receive payment for any build-transfer contracts across the year after the Ministry of Finance suspend consideration of using public assets to pay investors.
It was not until the end of 2018 that the Government issued a decree on this issue and as a result, most CII's business plans were shelved last year.
Secondly, the Trung Luong - My Thuan build-operate-transfer project, of which CII is a stake holder, was behind schedule. The project had to raise investment by nearly $43.2 million but the financial capacity of its investors is so limited that CII had to seek bank loans.
In addition, Yen Khanh Manufacturing Trading Service Company Ltd, a shareholder with 30 per cent stake in the Trung Luong - My Thuan project, committed some violations in its other projects. Banks required the venture to replace Yen Khanh in order to be eligible for loans. However, as concerned authorities had not allowed the replacement, banks refused to disburse cash for the project.
Thirdly, CII was not able to collect fees from the expanded Hanoi Highway project in Ho Chi Minh City, although it should have started in March 2018 as planned.
These bottlenecks dealt a crippling blow to the CII's business performance.
Due to problems with transport projects, CII general director Le Quoc Binh told shareholders that the company expected 95 per cent of its profit this year would come from real estate investment.
The company has set a target of earning a profit of $40.6 million this year.
Accordingly, CII owns a 49 per cent stake in NBB Investment Corporation and plans to increase to 64 per cent in the future. With the agreement between CII and NBB, in 2018, NBB divested two projects, expecting to earn about $86.4 million.
Binh acknowledged that CII was not specialised in real estate development and it would not focus on this field. However, CII could create a land fund and then cooperate with professional real estate developers.
CII is teaming up with Hong Kong Land to develop the 9-hectare Thu Thiem River Park in District 2, Ho Chi Minh City. The joint venture is building a housing gallery and expects to win construction permit in May.
Binh said CII was negotiating with developers on two other projects in addition to a 312-hectare project in Dong Nai province.