Vinhomes targets 40 percent profit increase this year

The company’s targets were announced at its annual general meeting (AGM) on Monday, the first since the company listed in May last year.

The AGM was chaired by Nguyen Dieu Linh, who was appointed chairwoman to replace Pham Nhat Vuong, founder and chairman of parent company Vingroup in February.

Vinhomes announced it plans to generate VND73.2 trillion ($3.13 billion) in revenue from its real estate business, a 90 percent increase from VND35.8 trillion ($1.53 billion) in 2018.

With an additional VND3.9 trillion ($167 million) of revenue the company plans to receive from joint ventures with Vingroup, its parent company, and Vingroup’s subsdiaries, Vinhomes hopes to raise its overall profit after tax figure by 40 percent in 2019 to VND20.6 trillion ($880 million).

Responding to doubts from shareholders that the targets set were too "ambitious" given the recent slowdown of liquidity in Hanoi and HCMC markets, chairwoman Nguyen Dieu Linh said that Vinhomes will look to expand to cities outside Hanoi and HCMC, but did not specify names.

According to the Vietnam Association of Realtors (VARs), the respective total value of real estate transactions in Hanoi and HCMC in the first quarter of 2019 was only 61.7 percent and 28.04 percent of the same period in 2018.

Recent regulations tightening control over banks’ short-term capital for medium and long-term loans, causing banks to raise interest rates, are to blame, they said. Buyers are unwilling to take home loans at high interest rates, the association said.

"[Slowdowns in Hanoi and HCMC] are only a short-term problem. There is a housing shortage in Ho Chi Minh City, and one of Vingroup’s real-estate projects in District 9 will soon complete formalities for selling," Linh said, also affirming that the Hanoi housing market was still stable with good consumption.

"Vinhomes will combine selling flats individually as well as in bulk to strategic investors. These strategic investors will also allow faster completion of housing projects, which usually takes 5-7 years if undertaken by Vinhomes alone," she said.

Vinhomes will also expand its serviced apartment leasing arm, Vinhomes Serviced Residences, and begin leasing office space in its urban complexes, she said.

Vinhomes operates 17 urban areas in Hanoi, Ho Chi Minh City, Quang Ninh, Hai Phong, Thanh Hoa, Ha Tinh and Bac Ninh.

In the first quarter, Vinhomes recorded consolidated net revenues of VND5.85 trillion ($250 million) and net profits of VND2.69 trillion ($115 million). Its VHM stock has the second highest market capitalization on the HOSE, Vietnam’s main stock exchange.