Dear fellow shareholders, investors, customers and the whole staffs of Thuduc House,
In 2009, the economy seemed to overcome recession and started to recover. However in the first six month the year 2010, though inflation was inhibited as a first step, the economy still existed implicit factors. In the third quarter, risks from local and overseas, the Government just begun to elements increase again. In the last months of the year 2010, the macroeconomic was very difficult.
The national budget continued to be overspent, balance of trade was deficit, foreign exchange posed pressure on local currency depreciation, stock market was on a sluggish recovery and consumer price index (PCI) went beyond expected level.
Therefore, the local property market, except for the Hanoi market, continued to turn idle during the first half of last year. The market then recorded a slight recovery in the third quarter, but it again went to frozen situation in the fourth quarter of last year
Selling prices of condo projects were on downward trend given a weak liquidity in the market, plus homebuyers’ incomes bitten by inflation and pressure increasing on loans which fall due. Meanwhile some developers found it hard to mobilize funds from customers, many others were unable to mobilize capital via stock market because of low liquidity and investors’ confidence in the market declining, not including the cash flow of foreign investors was partly withdrawn from the market.
Facing such challenges, Thuduc House’s management board has managed to cope with difficulties to keep investment rate in progress and exceedingly fulfilled the target profit that the group set for last year’s business performance to ensure dividends for shareholders and to increase financial resource and assets nearly 30% against the previous year.
Foreseeing a credit crunch in 2009, Thuduc House planned to issue convertible bonds, but the company failed to reach target given a prolonged procedure for issuing and market changing. There were only VND208 billion among the target of VND600 billion raised in the first phase.
Thuduc House still stood firm on its feet in the challenging year 2010 thanks to changing business strategies and having suitable solutions which the company’s management board set forth in the beginning of the year as follows:
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Developing a new product line named TDH – APARTMENT designed with high quality apartment to serve the housing demand of middle-income earners. Those condo projects include TDH - Truong Tho, TDH - Phuoc Binh and TDH - Phuoc Long.
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Drastically reforming the company’s managerial apparatus from senior to lower level in order to select qualified young staff supplement 03 deputy General Directors for Board of Director. Last year, some staffs were promoted to the post of director and deputy director at some departments in the company. Those gifted young personnel have sent a new lease of life, a more self-motivated and creative management team.
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Successfully developing the modern management system ERP program, following the SAP solution with reasonable price. Through the system, using the company’s resources has become more effective.
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Continuing to look for land sources by joining hands with partners which have available land sites; following the management board’s strategy of shifting investment to minimize site clearance in existing residents.
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Frequently rechecking cost management and construction quality management; especially building the company’s culture to have a transparent in management and in tenders so as to contribute to keep its staff honest; trimming unreasonable and invalid costs and increasing the competitive strengths for the company’s products.
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Focusing on core business of property trading. Other production activities and services will serve for the core business development or make use paces of the company’s property projects for development.
Entering the year 2011, the local economy has faced more challenges as the Government right in the beginning of the year was forced to use a bold measure to tame inflation, to stabilize the foreign exchange and gold market as well as the dollarization in the local economy. High interest rate and credit tightening policy, especially in the property sector have driven the property market into a gloomy situation. Stock market has witnessed fewer trades and low liquidity. In addition, although the Government has been trying to control the inflation, it has to increase the prices of needy commodities such as electric power, gasoline and oil in a hope to stop subsidizing those items. The move has triggered prices of other commodities increased, not including a certain rate of inflation going into the country via materials for production imported from other countries. However, a drastic solution in cutting public investment projects with their capitals to be sent to private sector is expected to send a positive effect to the economy in the coming time. Inflation has shown sign of cooling down, sending a positive sentiment in the second half of this year.
Facing the uncertainty situation, many property developers in HCMC are challenging with a risk of going bankruptcy because of a severe capital shortage and finding it hard to sell products to clear their stocks for paying debts in banks. Particularly, ThuDuc House will have to concentrate its capital to key property projects and to revise down expectation profit set for this year. The management board presents some basic solutions as follows:
- Postponing the development of property projects which are of mid and long term investment, such as some tourism property projects in the central city of Hue, or some projects which require a complicated site clearance and compensation. However, Thuduc House will not overlook business opportunities which can offer potential projects for the next development.
- Focusing on property projects which can immediately bring revenue and profits, such as TDH Truong Tho, TDH - Phuoc Binh, TDH Phuoc Long, TDH - Phuc Thinh Duc, Nhan Phu Commercial and Residential, Ben Luc-Long An Resident and Aquila Plaza projects.
- Continuing to mobilizing capital for project development by issuing corporate bonds and looking pool source from financial companies and real estate investment trust or REIT which is going to be established.
- Developing a new product line focusing office staffs as main buyers with low-cost apartments for sales, for rent and for buying installment. Those projects will be developed on available land sites including a resident nestled in Tam Binh Wholesales Market, Binh Chieu 2 and Hiep Binh Phuoc sections. With the advantage of its available land sources which were bought with low price, plus cheaper materials and small size, Thuduc House is expected to tailor affordable apartments to cater to the housing demand of the majority of laborers in the coming time.
- Continuing to renovate methods of sales, to promote brand, to take full advantage of effective vehicle such as internet to market products, using the company’s available database of customers associating with direct sales program to companies, as well as taking the advantage of the company’s relations to sell products.
It is for sure to say that the year 2011 is a stiff challenge for all local companies, particularly for property ones. However, with our traditional, we strongly believe that Thuduc House’s management board, who takes the new term of office, will pilot our fleet overcoming the coming tsunami to survive and grow so that each stage of development will be a higher step, bringing more happiness to clients, shareholders and staff and contributing to society.
LE CHI HIEU
Chairman and General Director