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Slow licencing takes its toll on Dat Xanh Group

Slow licencing takes its toll on Dat Xanh Group

Ho Chi Minh City-based real estate developer is struggling to complete legal procedures for its projects.
19:00, 24/04/2019
An artist impression of Gem Riverside apartment complex.

An artist impression of Gem Riverside apartment complex.

Dat Xanh Group has anticipated a slowdown in revenue and profit growth this year as delays in real estate project licencing has affected its sales plans.

The company’s recent annual general shareholders meeting approved a cautious business plan for this year, with revenue of around $217 million and net profit of $52.2 million, an increase of 7.6 per cent and 2 per cent compared to last year, respectively.

Failing to complete legal issues for its real estate projects took a heavy toll on Dat Xanh Group’s business last year, with total number of apartments sold reaching only 18,000, or 30 per cent less than planned and down 18 per cent year-on-year.

Dat Xanh is among hundreds of real estate developers in Ho Chi Minh City, who have been affected by the city’s slow licencing process. Following arrests of several senior officials who were accused of wrong-doings in approving state-owned real estate projects, officials in the city were said to get more cautious in approving new projects.

Dat Xanh Group currently has dozens of projects in the process of completing legal investment procedures. Among them, Gem Riverside is one of the biggest with total spending on it reaching $62 million by the end of last year.

Gem Riverside is a 6.7-hectare project located in District 2’s Nam Rach Chiec residential area. It is designed with 3,175 apartments at development cost of around $263 million.

Other projects such as Opal City, Opal Skyview and Gem Premium may also face at least one-year delay in launching due to uncompleted legal procedures.

Dat Xanh has invested more than $43.5 million into Opal Boulevard in Binh Duong province, Opal City in Ho Chi Minh City and Opal Oceanview in Nha Trang, but all three projects are still finetuning investment procedures.

In addition to 17 projects it is directly investing in, Dat Xanh Group is co-developing some 30 other projects.

Expanding investment portfolio and increasing borrowings have caused a cash deficit in Dat Xanh’s business for three consecutive years.

Dat Xanh Group plans to increase its chartered capital from the current $152 million to $226 million through dividend payment and additional ESOP stock issuance for shareholders.

The company recently issued more than $10 million of convertible bonds to a Korean financial investor, as part of the plan to issue total $60.8 million in order to mobilize capital to develop land fund.

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