As the market shows signs of revitalization, a general contractor with a skilled workforce and strong financial health is poised for significant growth.
The vibrant sounds of construction sites for multi-billion-dollar projects are signaling the return of dynamic activity to Vietnam’s construction sector. After a prolonged period of stagnation, the industry has seen a strong comeback with a series of large projects being continuously launched. Leading contractors such as Coteccons, Central, Newtecons, and many others are tirelessly working to reposition themselves and build a foundation for sustainable development.
However, this recovery is not solely a matter of winning more projects; it is also a challenge of internal capabilities, particularly the financial strength of these enterprises. A major question arises: do the general contractors have the necessary capacity to execute and complete these multi-billion-dollar projects amidst fierce competition, stringent requirements on timelines, and quality?
Reports from the Mirae Asset Vietnam Securities (MASVN) analysis team have highlighted a significant risk today: the shortage of capable contractors, leading to numerous issues such as project delays, decreased construction quality, and increased costs. In this context, the ability to maintain stable cash flow, control risks, and optimize resources becomes crucial to success.
Having consistently secured a series of projects worth billions of VND, Central Construction Joint Stock Company, with its sustainable development strategy, has affirmed its position thanks to its strong workforce and outstanding management capabilities. Currently, the company boasts nearly 900 experienced engineers and over 10,000 skilled workers from various regions, enabling optimal labor mobility and ensuring project timelines are met without obstruction, regardless of the project’s location.
Financially, Central continues to prove its stability through tight management and proactive cash flow control, avoiding the pitfalls of stagnant projects amid the recent turbulence in the bond market. Rather than chasing revenue, the company maintains a balanced approach between growth and risk control, ensuring that each project delivers long-term value.
During the 2022-2024 period, as the construction market faced numerous fluctuations, Central demonstrated exceptional stability and superior management capacity. In 2022, the company achieved a post-tax profit of VND 233 billion, a positive result amid challenging circumstances. In 2023, despite the ongoing struggles in the real estate market, Central still maintained a profit of over VND 200 billion. By 2024, the company continued to hold steady with a post-tax profit exceeding VND 200 billion, reaffirming its sustainable development strategy and effective adaptability.
Moreover, Central has maintained a leading position in terms of Return on Equity (ROE). As of the end of September 2024, this ratio significantly outpaced its industry competitors, reflecting the company’s exceptional business efficiency.
Risks from the Short-Term Revenue Race
While Central focuses on sustainable development, many other contractors are engaging in a revenue race at all costs. This includes strategies like bidding at low prices or even advancing funds to investors to secure contracts. While these tactics may boost short-term revenue, they come with significant risks, including cash flow imbalances—particularly when projects face legal issues or delays as seen in recent times. Advancing funds to investors not only puts pressure on budgets but also reduces a company’s financial flexibility.
Additionally, undercutting bid prices in order to win contracts may lead to cost-cutting on construction expenses, which severely impacts the quality of the final product. Some projects, once completed, have resulted in a range of negative consequences—from increased operational and maintenance costs to a tarnished reputation for the contractor.
A Safe Choice for Investors
Unlike high-risk strategies, Central maintains a healthy capital structure and a sustainable financial strategy. The company’s debt-to-equity ratio has consistently remained among the lowest in the industry, standing at 12.3%, 5.7%, and 11.8% in 2022, 2023, and 2024, respectively. This not only alleviates interest payment pressures but also enables the company to reinvest its internal resources, positioning itself to expand into new sectors and markets. Central’s current ratio also reflects its stable financial capacity, achieving 1.15x, 1.17x, and 1.43x over the past three years. This ensures the company can settle debts promptly, reinforcing trust among partners and asserting its reputation in the industry.
In a volatile market, Central’s cautious approach and sustainable development strategy have made it a reliable partner for investors. Its strong financial position is not only the key to securing multi-billion-dollar projects but also serves as a solid foundation for long-term stability and growth.
In conclusion, as the construction industry witnesses a strong rebound thanks to public investment projects and the recovery of the real estate market, companies with robust financial health—such as Central—are becoming increasingly valuable partners, providing reassurance to investors. As the economy enters a new growth cycle, the demand for timely project completion, exceptional quality, and long-term impact will be more critical than ever. Therefore, choosing reputable and high-quality contractors is not only essential for ensuring the success of a project but also for cementing the long-term value and standing of each building or infrastructure development.
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