HODECO Sells Billion-Dong Project: What's Behind the Move?

Bà Rịa - Vũng Tàu Housing Development Joint Stock Company (HODECO - HDC), a major real estate developer in Vietnam, has decided to transfer a large-scale project valued at VND 1,050 billion (approximately $42 million USD). On September 22, HODECO's Board of Directors announced the in-principle approval for the complete transfer of the 'HODECO Seavillage' project, located along 3 Tháng 2 Street in Rạch Dừa Ward, Vũng Tàu City. This project, spanning 2.58 hectares, was planned to include 132 commercial apartments, 795 condotels, and 39 townhouses. HODECO has been developing this project since 2011, though its scale was adjusted in 2020 to the current area. Furthermore, in July, HODECO completed its exit from the 'Dai Duong Vung Tau Tourist Area' project, a 19.5-hectare development with an estimated total investment of VND 4,300 billion (approximately $170 million USD) in the Chí Linh - Cửa Lấp area of Vũng Tàu City, by divesting its 47.27% stake from Dai Duong Vung Tau Entertainment and Construction Investment Joint Stock Company. These significant asset divestments are believed to be driven by HODECO's financial situation, particularly cash flow pressures. While the audited financial statements for 2025 show a surge in income from recovering investments in other entities to nearly VND 939 billion (approximately $37 million USD), this could be interpreted as a temporary financing measure. Concurrently, the company has issued nearly VND 1,000 billion (approximately $40 million USD) in corporate bonds and increased its capital through share issuance, aiming to restructure its capital composition. According to the reviewed consolidated financial statements for the first six months of 2026, net revenue increased by over 91% year-on-year to VND 343 billion (approximately $13.5 million USD). However, financial expenses more than doubled to VND 84 billion (approximately $3.3 million USD), and corporate management expenses also rose by 1.8 times to VND 41 billion (approximately $1.6 million USD). Net profit, supported by a sharp increase in other income, grew by nearly 42% to VND 102 billion (approximately $4 million USD). Despite this, net cash flow from business operations significantly deteriorated to a negative VND 411 billion (approximately $16 million USD) in the same period, continuing the negative trend seen in 2024 (negative VND 133 billion) and 2025 (negative VND 1,017 billion). In a letter to shareholders, HODECO's Chairman stated that the management's top priority is to optimize business cash flow by accelerating sales, collecting debts, and focusing on delivering existing products. The company is currently concentrating its resources on projects such as 'The Light City' (Phase 1), 'Ngoc Tuoc 2 Hill Villa Area,' 'Ecotown Phu My' (Eco Home CC1), and 'Bien Da Vang.' Vietnam's economy, under its one-party system, continues to grow, with real estate development being a key sector. However, in recent years, some developers have reported financial difficulties and project delays, and HODECO's actions may reflect these broader industry challenges. Meanwhile, Vietnam maintains a balanced approach in its relationship with China, deepening economic ties while prioritizing geopolitical equilibrium. HODECO's asset sale is thus noteworthy as an indicator of domestic real estate market trends and the overall health of the Vietnamese economy.