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|The burning Carina Plaza this morning|
577 Investment Corporation, the developer of Carina Plaza
Carina Plaza, a project of 577 Investment Corporation, was built on an area of 19,318 square metres on Vo Van Kiet Street in Ho Chi Minh City’s District 8. The total investment was VND927 billion ($40.8 million), including 95 per cent of NBB and 5 per cent from Hung Thanh Co., Ltd. This building was launched in 2012 and was operated by Hung Thanh, a subsidiary of NBB.
577 Investment Corporation was formerly a branch of CIENCO 5 in Binh Thuan province, established under Decision No.4750/QD-TCCB dated November 1, 2004.
NBB has set up a joint venture with several enterprises, such as Transport Engineering Consulting JSC No.533, Viet Thanh JSC, Nhip Cau Dia Oc Service JSC, Tam Phu Investment and Contruction Co., Ltd., BOT Rach Mieu Bridge Co., Ltd., and Ninh Thuan Investment and Contruction Development JSC.
The major business lines of NBB are real estate development and trade (the core operations), transport infrastructure construction, hydroelectricity and thermo-electricity power plant construction, electricity production, transmission, distribution and trade, mining, ecotourism business.
Since its establishment to 2017, 577 Investment Corporation has invested into a dozen real estate projects, including new urban areas and apartment buildings, and owns 370ha of cleared land in five cities and provinces. Some outstanding projects are City Gate Towers, Carina Plaza, NBB2, 3, 4, Diamond Riverside (Ho Chi Minh City), and a villa and resort complex in Quang Ninh and Binh Thuan.
Although holding a huge land fund, the business results of NBB are getting increasingly worse. In 2012, the net revenue of the company hit VND1.077 trillion ($47.5 million). After-tax profit was VND289 billion ($12.7 million), which was a significant growth compared to other businesses.
However, in 2013, revenue from real estate sharply decreased due to the market freezing over. The net revenue in 2013 declined to VND202.7 billion ($8.93 million), after-tax profit to VND24 billion ($1.06 million), down 91 per cent over 2012. NBB fell into a sharp decline in solvency from 10 times in 2009 to around two times during 2010-2013.
According to Viet Capital Securities Company (VCSC), NBB had to pay interest of around VND170 billion ($7.5 million) per year during 2010-2013.
Stocks dropping after Carina Plaza fire
To tackle these issues, 577 Investment Corporation divested from other business operations to focus on real estate as well as renewed loans and raised equity capital.
In 2013 and 2014, NBB issued 36 million shares, raised its charter capital to VND583 billion ($25.7 million) from VND180 billion ($8 million), and welcomed Creed Group (from Japan) as an important partner.
Creed Group poured VND600 billion ($26.4 million) into City Gate Towers to gain 80 per cent of the project’s total shares. The group also purchased 4.6 million shares of NBB at the price of VND19,800 apiece to invest into the NBB2 and NBB3 projects.
577 Corporation did not gain much revenue from real estate during 2015-2016, as revenue was only VND41.2 billion ($1.8 million) in 2016. In the second quarter of 2017, City Gate Towers went into operation, raised net profit to VND55 billion ($2.4 million), 24 times higher than the same period in the previous year.
Right after the fire in Carina Plaza this morning, which killed 13 people and injured 28 more, the shares of NBB have fallen dramatically. The ticker fell 6.9 per cent over a single day to VND23,750, the lowest price within the last two months. This decline resulted in NBB losing over VND170 billion ($7.5 million) in capitalisation in one day.