It’s now the golden age of companies with big cash reserves
While many companies suffer headaches because of the lack of capital and overly high interest rates, some other companies still have trillions of dong deposited at banks which would be disbursed when they can find good projects.
Among real estate enterprises, which have been “moaning” about the difficulties to access bank loans due to the policy on tightening credit to non-production sectors, Hoang Anh Gia Lai is one of the rare enterprises which have the cash reserves of trillions of dong.
In late April 2011, Doan Nguyen Duc, Chair of Hoang Anh Gia Lai Group announced that the group had 2400 billion dong in cash and it was ready to purchase projects and the clean land funds of other companies, which met difficulties in capital arrangement. Duc stated that he decided to push up the investments in the real estate sector, even though the real estate market was in difficult conditions.
At the beginning of June, the group announced that the cash reserves had reached 3400 billion dong. If counting on the 55 million dollars that Singaporean Temasek is going to disburse, Hoang Anh Gia Lai would have the sum of cash of up to 4500 billion dong, enough for the investments until 2012, despite the difficulties caused by the credit tightening policy.
Analysts have commented that the purchase deals would well serve Duc’s business plan in five years.
While the real estate market has fallen into crisis due to the lack of capital, Duc has stated: “Despite the gloomy real estate market, I will not give up, but I will push up investments”.
The Vietnamese businessman, who has been well-known as the first Vietnamese person, who owns a private aircraft, believes that it is now the right time to create land fund. Hoang Anh Gia Lai has reaped big fruits on the real estate market thanks to “the art of creating land fund”. In 2004, it purchased land plots at low prices, which later has well served its business plan.
Masan Group is also the business which has its pockets clinking with plenty of money in the crisis period. By early April, Masan reportedly had the cash reserves of five trillion dong. That explains why a considerable proportion of income of the group comes from deposits’ interests.
The group has announced that by March 31, the total interests from its deposits had reached 135 billion dong, which contributed to the profit increase of 250 percent in comparison with the same period of the last year.
Both Hoang Anh Gia Lai and Masan are private companies which received big money from foreign investors. Hoang Anh Gia Lai has completed the convertible bond issuance to Temasek. It had also sold 19 million shares to Deutsche Bank and 90 million dollars worth of international bonds before banks began tightening credit.
Meanwhile, Masan always has high business growth rates and stable cash flow. Besides this, it also gets big sums of money from foreign investors. With the sale of a subsidiary to Kohlberg Kravis Roberts, Masan has earned 159 million dollars.
Kim Long Securities Company has been known as one of the rare securities companies which still have big sum of cash when the stock index keeps falling. At this moment, the company has 1800 billion dong in cash deposited at banks.
While most of other securities companies are incurring loss, Kim Long still reported the profit of 30 billion dong in the first quarter of 2011. Chair of Kim Long – Ha Hoai Nam – said that in the crisis, having cash in hands proves to be a big advantage.
“We will not back out from the market, but we are waiting for our opportunities to continue making investment,” he said.
Commenting about the companies with big volumes of cash, Pham Duc Thang, General Director of Kenaga Securities Company, said that cash is the kind of assets which do not have high risks while having good profitability in the context of the current crisis and high bank loan interest rates. The companies with much money also have more investment opportunities than others.