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“An Apology from the CEO: Reflecting on 2024 Results and Our New Venture into Industrial Real Estate”

22 April, 2025

Several factors led to a lackluster response from shareholders at the HDC meeting

Chairman of HDC, Doan Huu Thuan, revealed that as of 3 pm, two hours after the opening, the meeting was still short of nearly 8% of the required quorum as per legal regulations.

On the record date for shareholders to attend the meeting, Hodeco had a significant number of 18,645 shareholders. There was a long period between the record date and the meeting date, during which the market witnessed numerous fluctuations, especially the US tariff event, which led to many shareholders selling their shares, while others were not enthusiastic about attending or only holding the shares nominally.

A snapshot of shareholders attending the 2025 Annual General Meeting of HDC – Photo: Screen capture.

Despite the unsuccessful attempt to reach the quorum, Mr. Le Vinh Lien, Member of the Board of Directors and General Director, took the time to share the company’s performance. On behalf of the Board of Directors and the Management Board, he apologized to the shareholders for HDC‘s failure to achieve its 2024 plan, with a net profit of less than VND 67 billion, completing less than 20% of the set target.

Mr. Lien acknowledged that 2024 was a challenging year for the company. It was a period of new policies in the real estate sector, which contributed to a warmer and more stable market. However, in reality, the real estate market in Ba Ria – Vung Tau (BRVT) and neighboring areas recovered slower than expected.

In this context, HDC focused on investment preparation and land accumulation, which required a significant amount of time, especially with the real estate market undergoing many policy changes and legal obstacles in many places, including land price determination, according to Mr. Lien. For example, at the The Light City project, 3ha of land was priced two years ago, and the Department of Natural Resources and Environment of BRVT had to go through several auctions to select a unit to appraise the land price, and the chosen unit was based in Hanoi. The appraised price was submitted to the Appraisal Council three times but was not approved as the authorities believed it did not reflect the market price and could cause state budget losses.

Housing prices continue to soar, leaving workers struggling

After the Land Law 2024 came into effect, one of the land pricing methods applied was the surplus method, but the state agency needed time to develop criteria and determine the types of costs to be included in the pricing framework. This process took a long time, and at the 3ha site of The Light City project, the land price appraisal has not been completed yet.

Some of the company’s other projects are hindered by “stuck” state-owned land. When implementing these projects, the land must be assigned or leased by the state, but the new Law delegates the determination of public land criteria to local authorities to separate it into an independent project (land that can be auctioned), while land that does not meet the auction criteria remains stuck in determining the criteria.

Measures to stabilize the real estate market and lower land prices to make them more affordable for people, including policies to promote social housing, face challenges. The government always strives to provide a place of residence for all citizens. However, the age-old issue is that “land prices only increase, never decrease,” said Mr. Lien.

The reasons he mentioned include the depreciation of the Vietnamese currency and lengthy procedures. Without real reforms from state management agencies, it is difficult to reduce land prices. Even the equation of taxing real estate, taxing unused land, and taxing second homes to prevent speculation seems “vague” to him. “In my opinion, these measures are very vague. While workers earn money, save up, and hope to be able to buy a house, they are left waiting as prices continue to soar,” Mr. Lien expressed.

Mr. Le Vinh Lien, Member of the Board of Directors and General Director of HDC, speaking at the meeting on April 21, 2025 – Photo: Screen capture

Venturing into industrial real estate

Mr. Lien talked about HDC‘s new direction as they venture into industrial real estate and completely divest from CTCP Dau Tu Xay Dung Giai Tri Dai Duong Vung Tau (referred to as Dai Duong Vung Tau).

Previously, on April 18, the Board of Directors of HDC resolved to approve the transfer of all shares in Dai Duong Vung Tau. According to the 2024 Annual Report, Dai Duong Vung Tau has a charter capital of VND 645 billion, of which HDC holds 47.27%. The estimated value of this transaction is about VND 1,100-1,200 billion and will be recorded in 2025-2026.

This is also one of the factors that will contribute to the record profit expected in 2025 by HDC. The company sets targets for revenue of VND 1,459 billion, 3.5 times higher; after-tax profit of VND 530 billion, more than 7 times higher; and a value of up to VND 2,254 billion, 10 times higher than the previous year.

Additionally, HDC plans to distribute a 12% stock dividend for 2024, whereby the company will issue more than 21.4 million shares to shareholders. The chartered capital will then increase to VND 1,962 billion. The timing of the implementation is subject to the authorization of the Board of Directors.

Explaining the reason for not distributing cash dividends, Mr. Lien stated that the company owns many projects, while the chartered capital of nearly VND 1,800 billion and owner’s equity of about VND 2,300 billion are still modest. This amount is currently not enough to cover a medium-sized project in BRVT. “The company retains shareholders’ money to accumulate land funds. We persist in our long-term goal; if the company makes a profit and distributes cash dividends, either the growth rate slows down or there is no expectation of growth,” said Mr. Lien, adding that it is “reasonable” for the company to retain shareholders’ money. If shareholders need money for personal financial needs, they can sell HDC shares on the exchange as the shares are liquid.

HDC recently completed a transaction with CTCP Xay Lap Thua Thien Hue (HOSE: HUB) in February, acquiring an additional 400,000 shares to increase its ownership to 43.55% in the Hue-based enterprise. The General Director of HDC shared that the company intends to venture into the industrial real estate sector and has identified this opportunity for a long time. In addition to construction, mining, building materials, and real estate leasing, HUB is developing the Phu Bai 1&2 Industrial Parks. Hodeco plans to invest about VND 400-500 billion to work with HUB to initially implement a number of industrial clusters in the South (Tay Ninh and Chau Duc, BRVT) and then expand to industrial parks.

Revenue and after-tax profit of HDC from 2005-2024

2025 – A pivotal year

The management of HDC considers 2025 a pivotal year, with a strong recovery in the real estate market and increased investment in social infrastructure and regional infrastructure. In particular, the merger with Ho Chi Minh City and Binh Duong will create a mega-city, which Mr. Lien believes will be of regional scale in Southeast Asia, contributing to 25% of Vietnam’s GDP. He expects HDC to benefit from the integrated market with Ho Chi Minh City in terms of population, as BRVT has certain characteristics that Ho Chi Minh City aspires to have. The merger will reduce intra-regional competition, increase inter-regional connectivity, and accelerate transportation infrastructure development, all of which will positively impact the real estate sector.

This year, HDC aims to obtain approval for the investment plan and construction permit for the Tran Phu villa area; complete the adjustment of the 1/500 planning for the Hodeco Seavillage project and obtain approval for the investment plan; expedite legal procedures and collect money according to the progress of the transfer contract with CTCP Xay Dung Thua Thien Hue (HUB) at Thong Nhat Apartment Building; obtain approval for the transfer of an additional 13ha of land in Long Dien; continue working with partners to increase ownership to 60% at the Bien Da Vang tourist area project; and proceed with the necessary procedures to acquire the right to use land for the Co May urban area and Vung Tau Wonderland projects.

Raising nearly VND 500 billion in convertible bonds to repay bank loans

The management also presented a plan to offer a maximum of nearly VND 500 billion in convertible bonds to the public within the year. The conversion ratio is 35,671:1,000 (for every share owned by the shareholder on the record date, there will be one right to buy, and for every 35,671 rights to buy, the shareholder will be able to buy 1,000 convertible bonds, and the right to buy can be transferred once). The bonds have a term of 2 years with a fixed interest rate of 10% per annum.

At the end of 2024, Hodeco fully repaid VND 100 billion of two lots of bonds issued in October 2022. The entire bond proceeds were invested in the The Light City residential project.

With nearly VND 500 billion raised from the bonds, the company will use it to repay debts to credit institutions, including BIDV – Vung Tau Branch (VND 90 billion), TPBank – District 2, Ho Chi Minh City Branch (nearly VND 152 billion), VPBank – Vung Tau Branch (VND 342 billion), Vietnam-Russia Joint Venture Bank – Vung Tau Branch (maximum of VND 201 billion), and VietinBank – Ba Ria-Vung Tau Branch (nearly VND 30 billion).

In addition, HDC also considers the plan to issue private placement bonds in the 2025-2026 period, with a value of about VND 500 billion, a term of 3 years, and an interest rate equivalent to bank loans.

In 2024, the The Light City residential project acquired an additional 1,162m2 of land; completed the construction of the structure and exterior of 82/82 LK9 villas, 41/68 LK7 villas, 46/46 LK4 villas, pile pressing of 46/56 LK3 villas, and 27/56 LK8 villas. The Do Ngoc Tuoc 2 villa area is in the process of completing the adjustment of the 1/500 planning. For the Antares tourist area project, the company has applied for a construction permit for the technical infrastructure of the project.

The West 3/2 residential area project is in the process of adjusting the 1/500 planning. The Fusion Suites Vung Tau project continues to sell the remaining apartments. For the Phuoc Thang urban area project, the company has applied for approval to receive the transfer, contribute capital in the form of land use rights to implement the project, and change the company’s name with an area of 2.54ha.

Thu Minh

– 19:16 21/04/2025