VIS Rating - An affiliate of Moody's presents our credit view on the 2024 full-year financial performance of 25 top-revenue listed construction companies.
Here's what you need to know:
☑️ The financial performance of our covered construction companies improved in 2024, indicated by total revenue and net income growth of 15% and 44% year-over-year (yoy), respectively. This improvement was driven by the recovery of core construction business revenue and profit margins, especially in the industrial and infrastructure segments, reduced interest expenses, and contributions from non-core businesses such as real estate project revenue recognition (VCG, L18) and asset liquidation (HBC).
☑️ In 2024, both public investment and FDI disbursement reached all-time highs of VND 660 trillion (+4%yoy) and USD 25.35 billion (+9.4%yoy), respectively, creating robust construction demand and improving the sector’s average gross margin to 8.2% (2023: 7.4%). In addition, most constructors also reported strong backlogs at 2024 year-end such as CTD (VND 30 trillion, +20%yoy), VCG (VND 19 trillion, +3%yoy), LCG (VND 7 trillion, +22%yoy).
☑️ Stabilizing total debts (+3%yoy) in combination with a low-interest rate environment also benefited constructors as their total interest expense decreased by 14% yoy. As a result, debt repayment capacity has improved, with the average Debt/EBITDA ratio decreasing from 6.0x to 5.3x, and the average interest coverage rising from 1.5x to 2.7x. However, construction companies’ operating cash flow remained highly volatile. Many companies saw negative operating cash flow in 2024, driven by significant increases in account receivables (HTN, SJE, FCN), inventory (CTD, VCG, LCG), and receivables from business cooperation contracts (CC1).
“2024 marked a substantial recovery for the construction sector regarding revenue, profitability, and debt repayment capacity. We view growth drivers in industrial and infrastructure construction segments will continue to perform well in 2025, alongside acceleration in residential property construction following extensive project development since 2H2024. Hence, the financial performance of construction companies will continue to improve in 2025.” Pham Anh Tu – Associate Analyst, VIS Rating.
Exhibit 1: Financial performance of construction companies improved in 2024
Source: VIS Rating
Note: Top 25 listed construction companies in terms of revenue
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