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Hoang Anh Gia Lai provides cautious profit guidance
Hoang Anh Gia Lai Joint Stock Co. (HAL: HAGL) expects pretax profit to rise 14.3 percent this year but profitability to be sharply down.
At its annual meeting held this week, the diversified company forecast operating profit to go up to VND1.15 trillion (US$64.6 million) on revenues of VND3.1 trillion.
The third-biggest company on the Ho Chi Minh Stock Exchange last year reported a pretax profit of VND1 trillion ($56.2 million) on revenues of just VND1.88 trillion.
“This profit forecast is based on the worst-case scenario of the property market not recovering this year,” Chairman Doan Nguyen Duc said at the meeting. “We only calculated our profit this year based on the residential transactions that have been signed.”
Investors were disappointed at the low guidance, and the company’s share price retreated for the second straight day on April 16, losing 4.51 percent to close at VND66,500.
Hoang Anh Gia Lai revealed that its first-quarter operating profit was VND350 billion ($19.7 million), coming mainly from sales of apartments in three projects.
Half the 802 apartments in its under-construction Phu Hoang Anh Apartments in District 7 have been sold. It expects to make a pretax profit of VND277.1 billion ($15.6 million) on sales of VND522.7 billion this year from the building, which will be ready for occupation in 2010.
The company also expects to make a profit of VND391 billion ($22 million) on sales of VND820.3 billion at Hoang Anh River View, also to be finished next year. Of the building’s 676 units, 65 percent has been booked already.
“We expect a significant surge in profit by 2012 when our major investments become fruitful. They comprise thousands of hectares of rubber, a 200 MW hydropower plant and investments in mining,” Duc said at the meeting.
Hoang Anh Gia Lai owns around 300,000 cubic meters of wood lumbered in Laos. The Laos government is paying off a $15 million contract with HAGL to build the SEA Games village in timber.
The company has entered the power sector, and is set to put into operation two hydropower plants this year. It is doing a feasibility study in Laos to build a 100-MW plant.
Hoang Anh Gia Lai is also seeking to buy iron mines in Laos’ highland and southern provinces.
“Hoang Anh Gia Lai will become a conglomerate. Earnings from property, which is now the largest profit earner, will account for only 20 percent by 2012. But Hoang Anh Gia Lai will still strive to become the largest real estate company in Vietnam,” Duc said.
Duc was also confident that with many subsidiaries in construction and construction material distribution, it can become more cost-efficient than its competitors.
Analysts said Hoang Anh Gia Lai shares are attractive since the company has many large investments in the pipeline.
But they also warned it faces the risk of loss from spreading itself too thin.
Tai Viet
thanhnien
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