Coteccons Construction emerged from a period of turbulence to post a remarkable turnaround last year, underscored by robust financial results and a proactive drive towards sustainable growth within the construction industry.
Three years ago, Coteccons faced a series of challenges including internal conflicts, frequent changes in leadership, damage to its reputation, loss of contracts, falling revenue, and increasing bad debts. From being “a colossus” in Vietnam’s construction industry, doubts were cast on its survival as staff turnover rate escalated.
Against these odds, the newly appointed leadership at Coteccons laid out an ambitious recovery strategy focused on stabilization, transformation, and expansion.
Subsequent years saw the company undergoing pivotal changes in its business model, financial structure, governance, and corporate culture. By the end of 2021, Coteccons confidently declared its comeback, evidenced by winning bids for dozens of projects worth tens of thousands of billions of VND.
The second quarter of 2022 heralded a new phase of growth, marking Coteccons’ first quarterly revenue increase since 2020 by 28 per cent year-over-year.
This momentum was sustained and amplified in the subsequent quarters, with revenue tripling and then doubling, culminating in an annual revenue of almost $615 million, a 60 per cent increase on-year.
This remarkable performance enabled Coteccons to reclaim its status as Vietnam’s top 1 premier construction firm by revenue, a title briefly held by Hoa Binh Corporation.
Despite facing a real estate downturn and myriad challenges, Coteccons sustained a growth trajectory in 2023. Mid-year financials revealed revenue of approximately $285 million, up 30 per cent from 2022, and a post-tax profit of almost $2.2 million, an 862 per cent increase, surpassing the set targets by 18 per cent. The company also reported a significant positive cash flow of nearly $40 millionjust under $40 million.
In the first quarter of fiscal year 2024, equivalent to the third quarter of 2023, Coteccons continued to grow by 32 per cent in revenue, reaching $167.8 million and reporting a post-tax profit of $2.69 million, the largest since the beginning of 2021.Over the first nine months of 2023, Coteccons amassed a revenue of just over $458 million and a post-tax profit of almost $5 million, reaching the hundred-million-dollar profit threshold for the first time in three years.
Throughout 2023, Coteccons secured several significant contracts with a combined value close to $760 million, establishing a backlog exceeding $1 billion for the 2024 – 2025 period, laying a solid foundation for the company’s future.
This achievement was created not only by the tireless efforts to overcome challenges but also from the smart strategies of Coteccons, among which “repeat sales” is a highlight.
Coteccons has also solidified its market dominance through strategic re-engagements with partners, securing not only second and third tender invitations but also direct project appointments by investors.
A prime example is its direct selection by VinFast for successive projects, most recently for the third installment of the automotive manufacturer’s complex.
Similarly, Vinhomes and Ecopark have chosen Coteccons for major projects, including Ocean Park, Smart City, and Grand Park, along with the Sky Forest project, valued at approximately $118.14 million. The firm’s impressive performance at the Diamond Crown project led to its selection by Doji Land for the Golden Crown project in Hai Phong, further cementing its reputation for excellence.
Coteccons’ ability to garner strategic trust from top-tier investors is rooted in its unwavering commitment to elevating construction standards. With a reputation for delivering high-quality output, adhering to timelines, and competitive pricing, the company has set a benchmark in the industry.
The introduction of “PD Empowerment,” allowing project directors greater autonomy in sourcing and project management, has propelled Coteccons to new operational efficiencies, optimizing resources to deliver unparalleled results.
Strategically expanding its portfolio, Coteccons has diversified into various construction market segments, notably making a significant leap into industrial construction. This diversification strategy bore fruit with the awarding of the $1.3 billion contract for the construction of the LEGO factory in Binh Duong in August 2022.
The landmark project marks a new growth trajectory and underscores Coteccons’ successful foray into the demanding foreign-clientele market, reflecting the company’s alignment with Environmental, Social, and Governance principles and green technology adoption. As of September last year, Coteccons and its affiliates have completed 38 LEED-certified projects, a notable contribution to Vietnam’s green building credentials.
Beyond construction, Coteccons has ventured into real estate development, commencing with The Emerald 68 project in Binh Duong, in collaboration with Le Phong Group. The company is actively seeking to expand its footprint internationally, targeting an ambitious $1 billion in capitalisation and $3 billion in revenue.
Coteccons’ strategic advancements and diversified achievements have not gone unnoticed, earning it spots in prestigious rankings such as the VNSI top 20 sustainable development enterprises, top 10 reputable contractors, and the VNR top 50 Vietnam The Best.
Its recent nomination for the Wechoice Awards in mid-January as a rapidly growing entity further validates its ascent in the construction and real estate sectors
Amid its strategic business expansion, the construction firm has undertaken a robust clean-up of its balance sheet, demonstrating resilience and forward-thinking leadership in the face of previously burdensome bad debts. Just three years ago, the company grappled with significant financial distress. Yet, through a commitment to transparency and decisive action, Coteccons’ leadership has effectively addressed these challenges, achieving a significantly healthier financial standing.
As of September 30, 2023, Coteccons reported total assets of just over $867 million, reflecting a strategic reduction in accounts receivable by 5 per cent from the beginning of the year to around $500 million, now representing 57 per cent of the total assets.
The company’s liabilities decreased by 6 per cent to almost $515 million, with borrowings down by 5 per cent to $48 million. Equity capital saw a modest increase of 0.8 per cent to $352 million, resulting in a commendable low debt-to-equity ratio of 1:46, positioning Coteccons among the most financially stable entities in Vietnam’s construction sector.
Remarkably, Coteccons stands out for its financial health in an industry plagued by liquidity challenges, boasting a significant increase in cash and cash equivalents to $94 million, up 18 per cent.
Alongside fixed deposits of $65 million, the company’s liquidity reserves total almost $163 million, marking it as a frontrunner in the construction market. This fiscal solidity not only reinforces Coteccons’ reliability in tender processes but also enables the execution of innovative solutions and optimisation of project investment strategies.
This financial stewardship has earned Coteccons a BBB (stable) rating from FiinRatings, highlighting its exceptional standing in the construction industry.
Despite previous periods of skepticism, particularly between 2020 and 2021, Coteccons has underscored the vital importance of trust and partnership within the construction sector. The company has actively worked to rebuild industry confidence, advocating for unity among firms to collectively overcome significant challenges.
At Coteccons, we recognise that the cornerstone of Vietnam’s construction industry’s challenges lies in the trust between partners and contractors. Our concerted efforts have focused on repairing this trust and rallying businesses together to surmount these unprecedented difficulties. This commitment led to the creation of the Hoa Lu consortium, a strategic alliance with leading contractors such as Hoa Binh, Delta, An Phong, and Central Cons. This initiative was not merely a competitive bid for the Long Thanh Airport project but symbolized Coteccons’ dedication to building reciprocal relationships within the industry.
In response to the severe repercussions of the industry’s debt chain, which disproportionately impacted the labor force, Coteccons initiated proactive measures to enhance the livelihoods of its workers. “Some might argue that Coteccons has lost its former stature, but to us, greatness loses its meaning if the festive season of Tet lacks the joyful smiles of our workers” said Vo Hoang Lam, CEO of Coteccons sharing motivations of “Xay Tet 2024”.
The “Build Tet 2024” campaign, inaugurated by Coteccons from December 23, 2023 to January 2024, aimed to deliver around 17,000 Tet gifts to those working away from their families, covering a broad spectrum of the country, with a focus on regions like Hanoi, Hung Yen, Quang Ninh, Quang Ngai, Ho Chi Minh City, and Binh Duong.
“As the industry’s frontrunner, we are in constant contact with 15,000 – 20,000 workers. We’re intimately familiar with the risks and challenges they face, particularly as Tet, a time for family reunions, approaches. Bearing heavy economic responsibilities for their families, these workers are truly deserving of our society’s appreciation,” said Bolat Duisenov, chairman of Coteccons’ Board of Directors.
Coteccons is diligently implementing its business strategy both at the macro level and in small actions, which is likely one of the reasons why the company is thriving once again. This has been a breakthrough year, and it seems that this is just the beginning.
