Coteccons posts loss in Q2 due to debt provisioning

Its revenues were VND3.28 billion, up 29 percent year-on-year, and gross profits were VND215 billion, up 60 percent.

But net profits tumbled by 153 percent as expenses tripled, driven by the provision it had to make for debts owed by Viet Star Real Estate Investment Co. Ltd, the developer of the D’Capitale apartment project in Hanoi.

A subsidiary of Tan Hoang Minh Group, Viet Star was one of the companies involved in the VND10-trillion bond issuance fraud that got the parent’s chairman and key personnel arrested in April.

In the first half of the year Coteccons saw revenues rise marginally year-on-year to VND5.19 trillion, but net profits dived 95 percent to VND5.4 billion.

The management said the Tan Hoang Minh fraud and the tightening of credit to the property sector are the two main problems the company faces.

Rising construction material costs and a labor shortage exacerbate the situation, it added.

This year it targets VND15.01 trillion in revenues and VND20 billion in post-tax profits compared to last year’s VND14.59 trillion and VND334.55 billion.