HAGL says high debt not a cause for worry

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HAGL Joint-Stock Co., Vietnam's second-biggest listed property developer, reported a high debt-to-asset ratio of 63 percent for last year, but tried to allay concerns about its financial condition.

Total debts at the company reached VND15.5 trillion (US$744.5 million) at the end of 2011, up 50 percent from the previous year, with interest bearing debts accounting for 75 percent, news website VnExpress reported Sunday. Its assets were valued at VND25.5 trillion.

Despite the high ratio of debts over assets, HAGL officials remain positive about its business.

Vo Truong Son, deputy chief financial officer, said the company began to prepare for an economic downturn in 2008 and "there is nothing urgent about the current situation."

He said while interest-bearing debts were large, including VND5.7 trillion in bank loans, most of them have been invested in projects that will translate into assets later.

"The interest expense will therefore bring back corresponding revenues and will not affect profits at HAGL," he said.

However, an unidentified economist told VnExpress that the 63 percent ratio is "alarming" since it is much higher than the average acceptable ratio in other countries.

Fitch Ratings in March revised the outlook for Vietnam's top property developer HAGL to negative. According to Fitch, the company faced higher credit risks due to a sharp drop in property sales in Ho Chi Minh City.

Chairman Doan Nguyen Duc has said real estate accounted for 55.9 percent of total revenues for his company last year, but the ratio will fall gradually to around 15 percent. He said rubber and electricity will become the top priorities for HAGL.

He announced last month a plan to sell apartments at half the price of similar products on the market.

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