HAGL to undercut other Vietnam developers with cheap apartments

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HAGL Joint-Stock Co., Vietnam's second-biggest listed property developer, has announced plans to sell apartments at half the price of similar products on the market, saying the price cut would not hurt its diversified business.

The company cut prices by 20 percent last year and further reductions will be made in June, news website VnExpress reported Saturday, citing Chairman Doan Nguyen Duc.

He said HAGL has a large and cheap land bank to develop 16 residential projects with a total of two million square meters of housing. It will launch 2,000 apartments at "competitive prices" to the market each year, Duc said.

"The company will stay strong even after the price cut, since revenues will be reinvested in rubber, hydropower and mining projects for high profits," he said at an annual shareholders' meeting.

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. It began selling iron ore in 2011 and three of its planned 17 hydropower projects have begun generating power and more are likely to come on stream in 2012, the ratings agency added.

Duc 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.

The company has set a pre-tax profit of VND1.2 trillion (US$57.6 million) for 2012, down from VND1.7 trillion last year. It will pay shareholders a dividend of 15 shares for every 100 shares they own, retaining profits to invest in its business projects, according to an announcement after the annual meeting.

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