The company’s cash balance as of 31 March was substantially lower at VND1.7 trillion, compared with VND2.9 trillion as of the end of last year, primarily due to capital expenditures of VND1.6 trillion incurred during the first quarter, Fitch pointed out.
“The negative watch reflects HAGL’s continued tight liquidity, with its real estate inventory as of 31 March 2012 little changed from end-2011 levels. Also, HAGL’s new non-property businesses of iron ore mining, hydro power and plantations are yet to start generating meaningful revenues.”
According to Fitch, the ‘B’ long-term foreign and local currency issuer default ratings will be downgraded if HAGL’s cash balance continues to shrink as of end-June. The ratings may be affirmed if HAGL improves its cash balance to VND3 trillion and if its new businesses start generating “meaningful” revenues.
Vo Truong Son, deputy general director of the company, told news website VnExpress that it is unlikely that the cash balance could reach that level by June since there is not much time left.
However, Son said revenues will increase sharply in the final months of the year when interest rates fall and some of its power projects come online.
He also said Fitch’s assessments failed to reflect the real situation of Vietnamese companies.
According to VnExpress, HAGL (HAG) has jumped nearly 40 percent this year on the Ho Chi Minh Stock Exchange despite ongoing concerns about its financial situation and the property market as a whole.