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An industry park in Ba Ria-Vung Tau province. Photo: cafef.vn

Industrial park operators could see post-tax profits in the second half of this year fall 23 percent year-on-year to VND4.9 trillion (US$211.4 million) over travel restrictions and land acquisition delays.

With Vietnam restricting international flights in the second and third quarter this year, investors have mostly been unable to negotiate and seal deals with local operators, resulting in limited leasing activities in the first half this year, according to a report by top brokerage firm SSI Securities Corporation (SSI).

Although the government has eased quarantine policies for foreign experts and businesspeople starting this month and several international routes are set to resume soon, the number of flights available will still fall short of demand and negotiations will still be delayed in the remaining months of the year, the report says.

This means new leasing will likely fall 12 percent year-on-year in the last six months, it estimates.

Furthermore, difficulties in land clearance will lead to new industrial land supply increasing by a modest 5 percent in the last six months.

The SSI report forecasts that some operators will see profits plunging below the industry average due to a shortage of new tenants, according to VnExpress.

Factories seen in Chau Duc Urban Industrial Park in southern Ba Ria-Vung Tau Province. Photo courtesy of Sonadezi Chau Duc.

Sonadezi Chau Duc, which operates an industrial park in Ba Ria-Vung Tau Province, and Becamex IDC Corp, which operates several parks in the south, are likely to see post-tax profits falling 63 percent and 56 percent respectively.

The Dong Nai-based Industrial Urban Development JSC No 2 (D2D) expects post-tax profit to slump by 51.5 per cent year-on-year to VND178.7 billion (US$7.7 million), Viet Nam News said.

D2D also estimates that revenue this year will fall by 49 percent to VND414 billion.

In 2019, D2D recorded net revenue of VND763 billion and post-tax profit of VND368.5 billion, 2.7 and 4 times higher than in 2018, respectively.

The company attributed the sudden slump to the investment efficiency of the Loc An KDC project in Long Thanh District.

The Dong Nai-based Industrial Urban Development JSC No 2 (D2D) expects post-tax profits in 2020 to slump by 51.5 percent year-on-year to VNĐ178.7 billion (US$7.7 million). Photo cafef.vn

Sonadezi Long Thanh Holding Company (SZL), also in Dong Nai, has revised its revenue target in 2020 to VND409 billion, down 4 percent year-on-year, and post-tax profit of VND87 billion, down 16 percent compared to 2019.

Sonadezi Long Thanh has authorised its board of directors to adjust its business plans to match complexity of COVID-19. However, shareholders will need to be advised if the targets fall by more than 30 percent.

Illustrative photo. Source: vietnambiz

Tin Nghia Industrial Park Development JSC (TIP) expects its revenue to reach VND166 billion, down 24 percent against 2019, and pre-tax profit to touch VND93 billion, down 19 percent year-on-year.

TIP said this year the company will face difficulties regarding slow and complicated administrative procedures, higher costs for compensation and site clearance, and less FDI due to COVID-19.

Higher profit

Among the industrial park operators suffering the severe impacts of the pandemic, some still expect a higher profit in 2020, Viet Nam News said.

Phuoc Hoa Rubber JSC (PHR) has forecast total revenue of VND2.46 trillion, an increase of 52 percent, and pre-tax profit of VND1.15 trillion, double the figure in 2019.

The board of directors at PHR said it would respond to each specific scenario during the COVID-19 pandemic.

The company will also restructure projects it has invested in, including Truong Phat Rubber JSC and Phuoc Hoa Kampong Thom Rubber Development Co Ltd.

According to Viet Dragon Securities Co, PHR's industrial parks were located in the most favourable locations in Binh Duong Province so rental rates are expected to remain high, at around US$60-80 per metre square in Tan Binh and $90 per metre square in Nam Tan Uyen.

Among the industrial park operators suffering the severe impacts of the pandemic, some still expect a higher profit in 2020,. Photo: VIR

Vinh Phuc Infrastructure Development (IDV) aims to earn VND264 billion in revenue, and VND151.6 billion in post-tax profit, up 62 percent and 54 percent, respectively, compared to 2019.

This year, IDV plans to increase investment attraction at the Chau Son Industrial Park, and focus on expanding the Khai Quang Industrial Park and developing new industrial park projects.

With their government urging Japanese companies to move out of China, the expansion of some companies like chemical producer Shin-Etsu Chemical and optical products manufacturer HoYa Coporation is expected.

Vietnam has 261 industrial parks in operation and 75 under construction, according to the Ministry of Planning and Investment./.

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