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Construction industry enterprises strive to overcome the “storm”

Business results in the first quarter of 2020 of many businesses declined due to the impact of the Covid-19 epidemic, but construction industry enterprises firmly believed in the growth momentum in the following quarters.

Pham Viet Khoa, Chairman of the Board of Directors of FECON Joint Stock Company (FCN), said that the Covid-19 epidemic has clearly affected the economy in general as well as the construction market in particular, especially construction. tourism and resort real estate, however, the industrial real estate sector has good growth hope.

FCN’s new contract sales in the first quarter of 2020 reached VND 884 billion, about VND 234 billion in March alone.

For businesses in the construction industry, profits are often concentrated in the last quarters of the year, because this is the time to accelerate the handover of projects.

FCN leaders shared, in 2020 as well as in the next 5 years, 2 out of 5 key business segments of FCN are infrastructure construction, industrial construction and climate change prevention.

In March 2020, FCN signed many projects, including 2 projects that enterprises participated as infrastructure construction contractors: Vinh Tan port project in Dong Nai and Industrial Park project. Phuoc Dong wharf, Long An

Doanh nghiệp ngành xây dựng nỗ lực vượt "bão"

In addition, wind power projects and irrigation and anti-slide projects are also a strategic business segment within the next 5 years of FCN, aiming to reach more than VND 5,000 billion in sales in 2020.

The possibility of a decline in profit in the first quarter of 2020, but the signing of new contracts is a bright spot, will create a driving force for construction businesses in the coming quarters.

At Coteccons Joint Stock Company (CTD), in March 2020, the Company signed 2 new construction contracts for high-end projects, bringing the total value to over VND 5,000 billion in the first quarter of 2020, including including Complex Building project (8,320 m2 with 1,074 luxury apartments in District 1, Ho Chi Minh City) and The Metropole Thu Thiem project.

This positive signal is thanks to the efforts of all officers and employees, despite the common difficulties amid the Covid-19 pandemic.

The leader of CTD said that the Covid-19 epidemic continued to affect the whole economy in general and construction in particular.

In this context, the Company is willing to join hands for responsibility towards society and employees, even though the market is still facing many difficulties, causing revenue to decline.

The construction and installation industry is also under pressure to be affected in terms of revenue and workload. Although investment capital in the field of construction and real estate decreased, but Mr. Le Viet Hai, Chairman of the Board of Directors of Hoa Binh Construction Group Joint Stock Company (HBC), said that the company’s efforts expanding the market, participating in bidding for many projects including industry, infrastructure and abroad, with the total current bid value of more than 26,000 billion dong.

According to HBC, the profit structure in 2020 is expected to include 60-65% from the civil and industrial construction segments, the infrastructure segment will gradually increase the proportion to 35-40%.

To participate in the field of infrastructure and industrial construction, HBC purchased a 57% stake in Company 479 – a unit separated from Cienco 4 Corporation, specializing in infrastructure construction, having experience in Vietnam. large-scale infrastructure projects in the country, with a large number of customers.

Leaders of Xuan Mai Construction Investment Joint Stock Company (XMC) said that revenue and profit in the first quarter of 2020 decreased sharply compared to the same period in 2019, because many projects had to suspend construction according to regulations in order to Covid-19 pandemic prevention.

In which, revenue is estimated at 175 billion dong, down half compared to the same period last year.

On the stock market, the construction sector’s stocks recently experienced a sharp decline in line with the general market, although recently recovering, the P/E is still lower than the 2016 period, only about 5 times, compared to the previous year. Previously more than 10 times.

Mr. Dao Hong Duong, Director of Analysis, Petroleum Securities Company (PSI) said that the construction industry group will have a strong differentiation in the coming time.

Civil construction businesses can depend on the recovery of liquidity and capital inflows into the real estate market, while some foundation and infrastructure businesses can benefit greatly from their investment activities. government’s private sector.

The stock price of the above-average capitalization construction industry has a P/E of 3 – 5 times, the average decline is equivalent to the general decline of the market, possibly reflecting the general concerns of investors. investors to economic growth.

However, construction and installation stocks have relatively low valuation compared to the general market (VN-Index has a P/E of 10-11 times).

According to Mr. Duong, stocks in the construction and installation industry have a high beta coefficient (price volatility) due to the nature of their operations with high fluctuating levels of cash flow and net income.

However, the stock price of this industry group is being overvalued compared to the actual effects, partly under pressure from the net selling of foreign investors.

Therefore, when the negative effects pass, some stocks in the construction, foundation and infrastructure sectors may recover stronger than the market average, especially when businesses began to receive disbursed capital to promote public investment.

Declining first-quarter business results when announced may not have much impact on stock price movements, as it is likely already reflected in the price. Besides, this result does not represent the industry trend.

Currently, the story of capital flows, new contracts and jobs, and activities that businesses are implementing are the key points that reflect the internal health and resilience of each business, so investors, Analysts still highly appreciate businesses with strong brands in the field of foundation and infrastructure construction.

Source: stock news