Current Status of Real Estate Business Development of Song Hong Construction Joint Stock Company.

Any investment, purchase of equipment, raw materials or distribution, advertising for products... must be calculated based on the financial situation of the enterprise. An enterprise with strong financial potential will be able to equip modern machinery and technology, ensure quality, reduce product costs, organize strong promotional advertising activities to improve competitiveness. In addition, with a strong financial capacity, the enterprise is also able to accept losses for a short time to reduce product costs in order to maintain and expand market share for the enterprise to increase prices, earn more profits. A solid financial source is also a support for enterprises to gain trust and investment from customers and foreign investors. Enterprises that do not have enough financial capacity will be acquired by stronger competitors or withdraw from the market.

1.4.2.4. Competitors.

Potential competitors include new companies entering the industry, their current competitiveness is weak, but they have great potential and still have the ability to compete in the future. Potential competitors can reduce the profitability of the enterprise because they put into operation new production capacity, with the desire to gain market share and necessary resources. Therefore, when building a strategy, managers need to consider the risk caused by the entry of potential new competitors into the industry.

In addition, after joining the WTO, foreign investment capital in Vietnam is increasing, which also means that the number of businesses operating in the real estate sector is also increasing. Foreign businesses often have very professional real estate project development steps and marketing skills, so their products often gain the trust of customers, although the selling price is often very high. In addition, capital advantage is also a strength of foreign investors compared to domestic businesses.

1.4.2.5. Customers.

The real estate market has its own characteristics, greatly influenced by cultural, social, feng shui factors... In some real estate business areas such as office rental services, business headquarters... customers often have very different needs, in addition to common physical needs, customers often have very specific needs related to culture, feng shui... sometimes to satisfy these needs of customers is not a simple matter.

The supply in the real estate market in recent times is quite large. Therefore, customers and consumers also need products with quality, beautiful design, convenient location in traffic, and reasonable price... that is also

It is the competitive pressure from customers that suppliers must understand and have the best strategies for marketing their products.

1.4.2.6. Supplier.

Suppliers in the real estate business can be understood as individuals and organizations that provide premises, supply construction materials (for projects) or individuals who have real estate for sale (for real estate brokerage businesses). These suppliers have a certain influence on the real estate business activities of enterprises. Especially for projects, the site clearance stage often causes businesses a lot of trouble in terms of time, money and legal issues. To avoid bargaining or pressure from suppliers, companies should build mutually beneficial relationships or plan for diverse sources of supply.

CHAPTER II: Current status of real estate business development of Song Hong Construction Joint Stock Company.

2.1. Current status of real estate business development of Song Hong Construction Joint Stock Company.

2.1.1. General real estate business development status of Song Hong Construction Joint Stock Company in terms of business scale.

To evaluate the results of real estate product consumption of enterprises mainly based on revenue and quantity indicators. Through that, it is possible to see the market developments and the competitive situation in the market to see what has been achieved and the shortcomings that need to be overcome.

Table 2.1: Real estate business performance results 2016-2020.

Unit: Billion VND

STT

The indicators	KH 2016- 2020	Perform					Implemented 2016- 2020
The indicators	KH 2016- 2020	2016	2017	2018	2019	2020	Price treat	%KH
1	Expense Production and business	345.28	52.34	46.75	54.07	74.12	140.23	367.51	106.43 %
2	Initial value private	272.98	41,136	33.95	26.61	57.83	129.11	288.64	105.74 %
3	Revenue	651.47	16,629	17.38	398.84	125.77	124.92	683.54	104.92 %
4	Previous LN tax	78.27	5,842	0.491	50.33	16.08	13.11	85.85	109.68 %

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(Source: Financial report)

We have some comparison criteria:

- Absolute revenue growth:

+ 2020 compared to 2016: H= 124.92 16.629= 108.291 billion VND

+ Implementation 2016-2020 compared to plan 2016-2020: H'= 683.54- 651.47= 32.07 billion VND

- Ratio of actual annual revenue compared to plan in the 5-year period (2016-2020).

Revenue realization ratio =

683.54

651.47

= 104.92%

Through the above data, we can see the absolute difference in scale between years, between achieved results and the set plan. In general, revenue growth is quite stable.

stable, increasing steadily over the years (H and H' are both positive). Revenue exceeded the set target by 104.92%. To see more clearly the company's business development, we have a chart showing the correlation between the revenue, cost and profit factors of Incomex.

Chart 2.1: Represents the company's costs, revenue, and profits.

Incomex company period 2016-2020.

400

360

320

280

240

200

160

120

2016 2017 2018 2019 2020

Cost Revenue Profit

(Source: Financial report)

- The company's revenue from business activities over the years is the total amount of money earned, including the costs that the company has to spend to do business and the profits that the company enjoys. Through the analysis of the operating results of Song Hong Construction Joint Stock Company, we can see that revenue has increased every year, especially increasing sharply to 398.84 billion VND in 2018, but revenue in 2019 and 2020 decreased sharply (decreased by more than 200 billion VND compared to 2018) due to the impact of the Covid epidemic. Due to the impact of the epidemic, the business activities of the company's products have encountered many difficulties, but the products are still guaranteed to meet the needs of people in Hanoi.

- Business operating expenses are expressed as the total amount of money that the company spends to serve the production process and business activities of products on the market. Through the table of production and business results, we can see that the business operating expenses of each year have increased compared to previous years. In 2018, the increase compared to 2017 was 15.66%, equivalent to 7.32 billion VND, in 2020, the increase compared to 2019 was 89.19%, equivalent to 66.11 billion VND. Although the epidemic was complicated, in 2020, the business situation was still stable, so the consumption items maintained the sales volume, leading to an increase in sales capital, along with advertising promotion costs, location rental costs, and other costs.

Electricity and water costs and product input prices also increased, so costs are higher than in 2019.

The investment activities of real estate projects of Song Hong Construction Joint Stock Company are increasingly developing and expanding. The Board of Directors focuses on this area to bring in the main profit to maintain other areas that the company is initially developing. In order to have significant real estate business results in the period of 2017-2021, Incomex has focused on investing in potential projects, as well as spending significant capital and costs as follows:

Table 2.2: Construction investment costs (fixed capital).

STT

Expense item	Total amount (VND billion)
Expense item	Previous value tax	VAT	Net worth
I	Construction costs	154.42	15.44	169.86
1	Main house construction costs	152.28	15.23	167.51
2	Technical infrastructure outside the house	1.69	0.17	1.86
3	Demolish and dismantle existing house	0.45	0.05	0.5
II	Equipment costs	18.74	1.88	20.61
III	Project management costs	2.38	0.24	2.62
IV	Investment consulting fees build	8.99	0.89	9.89
V	Other costs	4.13	0.11	4.24
VI	Reserve fee			21.1

(Source: Finance Department)

- Business profit is expressed as the amount of money the company earns after deducting all costs for the business process. From the business results table, we see that the profit in 2018 was the highest, compared to 2019, it increased by 68.05%, equivalent to 34.25 billion VND. In 2020, the profit decreased compared to 2019 by 18.47%, equivalent to 2.97 billion VND.

2.1.2. Current status of general real estate business development of Song Hong Construction Joint Stock Company in terms of product structure in Hanoi.

Hanoi is the economic, political and cultural center of our country with more than 8 million people. Therefore, this is an extremely potential market in exploiting and developing real estate business. Below is a table of data showing the Company's market share structure in the Hanoi market in 2020.

Table 2.3: Revenue structure from real estate business by market of the Company in 2020.

STT

Market	Revenue (billion VND)
1	Hoan Kiem District	3,433
2	Dong Da District	6,545
3	Ba Dinh District	12.56
4	Hai Ba Trung District	11.25
5	Hoang Mai District	3,005
6	Thanh Xuan District	6,786
7	Long Bien District	10.99
8	Nam Tu Liem District	3,229
9	Bac Tu Liem District	4,223
10	Tay Ho District	8,009
11	Cau Giay District	7,856
12	Ba Vi District	1,986
	Total	79,872

(Source: Company Sales Department)

Hanoi has always been identified by the Company as the top priority and most important market to serve. Therefore, the development of real estate business in the districts of Hanoi is extremely necessary and focused. Based on the above data table, we have the following chart showing the specific proportion of districts in the Company's total revenue in the Hanoi market.

Hoan Kiem District

Dong Da District

Ba Dinh District

Hai Ba Trung District

Hoang Mai District

Thanh Xuan District

Long Bien District

Nam Tu Liem District, Bac Tu Liem District

Tay Ho District

Cau Giay District

Chart 2.2: Proportion of real estate revenue in districts of the company in 2020.

2% 4%

10%

16%

14%

(Source: Sales Department)

Incomex is growing stronger and becoming one of the enterprises with a large market share in Hanoi in terms of real estate supply. Many projects under the brand name of Song Hong Construction Joint Stock Company are gradually appearing in many districts and counties in Hanoi. In particular, some large districts of Hanoi are exploited by the Company with very good potential for real estate business development such as Ba Dinh District with a proportion of 16%, Hai Ba Trung District with a proportion of 14%, Long Bien District with a proportion of 14%, Tay Ho District with a proportion of 10%...

However, there are still many districts that the Company has not exploited, so the Company's revenue is still quite low and much lower than that of competitors in Hanoi.

Based on the assessment of the situation and results of the implementation of the plan for the period 2016-2020, with the characteristics and forecast of the economic and social situation as above. Song Hong Construction Joint Stock Company builds a 5-year plan for the period 2021-2025 with targets suitable for the scale, market, operating model and resources of the company as shown in the table above.

The Company determines the investment principle for the 2021-2025 period to continue to maintain stable production and business activities, accumulate resources to prepare the necessary facilities to expand the scale of operations, and increase growth rate when the market begins to recover.

Table 2.4: Estimated production and business value for the period 2021 - 2025.

Unit: billion VND

Main indicators	KH 2021	KH 2022	KH 2023	KH 2024	KH 2025	Total project phase 2021-2025
1	Production and business costs	141.23	142.56	145.86	148.14	150.67	728.46
2	Production value construction	36.57	38.04	41.29	43.03	46.17	205.1
3	Consulting value	100	109	113	126	133	581
4	Production value other business	10.37	10.34	10.35	10.39	10.32	51.77

(Source: Financial report)

It is expected that the projects will contribute greatly to production and business activities and revenue in the period of 2021-2025. Through the above figures, it can be seen that the Company's products have been trusted by consumers, so sales have increased and the Company's profits have also increased. This result is due to the Company knowing how to balance and calculate reasonable expenses. Although the Company's sales and profits have increased in recent years, the Company's leaders have constantly strived to achieve higher results, each year often setting a revenue target higher than the previous year for all employees to strive for.

2.1.3. General real estate business development status of Song Hong Construction Joint Stock Company in terms of investment efficiency.

Thanks to the far-sighted vision and tireless efforts of the Company's Board of Directors, the real estate business development activities of Song Hong Construction Joint Stock Company have achieved certain successes. Improving the efficiency of real estate investment activities in particular, and the production and business activities of the Company in general.

Table 2.5: Summary of revenue and gross profit by year.

Unit: Billion VND

Target

Year 2017	Year 2018	Year 2019	Year 2020	First half 2021
Sales and supply revenue service level	13.68	26.89	54.34	46.52	20.43
Cost of goods sold and supplied provide services	5.75	12.36	22.98	20.18	9.83
Gross profit on sales and service provision	7.93	14.53	31.36	26.34	10.6

(Source: Financial report)

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