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Listed firms leave property market

Update: September, 28/2013 - 08:57
Workers pack sacks at Lam Son Sugar. The company is struggling with falling profits. — VNA/VNS Photo Vu Sinh

HA NOI (VNS)  — Many listed companies are divesting from real estate to avoid negative impacts to their core business.

The profitability of the real estate market prior to 2010 made companies pour money into the sector, including seafood processor Dabaco (DBC) and Lam Son Sugar (LSS). However, once the economy became troubled, they faced a lot of challenges.

Lam Son Sugar's profit in the first six months of this year plunged over 63 per cent compared to the same period last year, reaching only VND23.2 billion (US$1 million).

LSS shares by mid August dropped around 50 per cent compared to the corresponding period last year. Their shares currently trade at only VND12,000 per unit.

The sugar company has not finished its investments in several projects, including Lam Son Hotel, Linh Son Eco-tourism Area and other complexes, which cost VND325 billion ($15.3 million).

The company's chairman Le Van Tam said since the beginning of this year he had restructured the company to stop investment in real estate and focus on sugar production.

Meanwhile, as of June, Dabaco recorded an unfinished investment cost of VND514 billion ($24.2 million). Three years ago the company established Dabaco Real Estate Co Ltd and issued bonds worth VND556 billion ($26.2 million) to pour into the property sector.

Around VND150 billion ($7 million) from the bond value was used. The company has decided to direct the remaining money into their main activity of seafood processing.

In the long term, if these lefthanders can sell their real estate projects, they would have resources to overcome the consequences of the current economic difficulties.

Tam said he hoped the business results in the second half of this year would improve as his company started to get rid of real estate. — VNS


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