Becamex: Nurturing Big Plans, Profits Plunge in First Quarter.    The annual report of Becamex (stock code BCM) - Vietnam’s largest infrastructure developer and a corporation that generates more than a million job opportunities each year, reveals its new ambition: To build a new type of ecosystem to create new growth drivers in the era of the digital and knowledge economy.

 

 Such is the new plan, however, Becamex recently released its Q1 2023 business results with consolidated profits of just VND 74.4 billion, a steep decline from 391 billion VND in the same period in 2021. The main cause for this drop, as explained by Becamex, lies in the reduced gross profit from sales and services of the Corporation, and a decrease in shared profits in affiliated companies in Q1 2023, compared to the same period the previous year.

 

 

Earlier, Becamex had also announced its business results for the entire year of 2022, with revenues falling sharply by nearly VND 580 billion compared to 2021, to VND 6,506 billion. Although the net profit for 2022 still recorded growth of over VND 210 billion compared to 2021, reaching VND 1,714 billion, the significant downturn had been forming since Q4 2022.

 

Will Becamex's downturn continue? What are the growth drivers for BCM when the figures seemingly offer no support for their ambition? In this article, we take a look back at Becamex's past journey and future plans to provide investors with full insights.

 

Becamex at 30: The journey of creating leverage for Binh Duong province through the Industry - Urban - Services development model.

As of now, Becamex is established for over 30 years. The 30-year journey of development has marked Becamex’s notable achievements. Generating over 1 million jobs each year, Becamex is not only significant to those directly involved, but also to the community and society at large as the livelihoods of many depend on the enterprise’s prosperity. From 2018 to 2021, Becamex reported that they have invested in more than 9,000 social housing units.

Throughout its journey, Becamex has not just been focused on its own growth, but has also played an essential role in promoting the socio-economic development of Binh Duong and the Southern key economic region. With its specialization in infrastructure development and the controlling stake held by the Binh Duong Provincial People's Committee, Becamex has significantly contributed to the comprehensive enhancement of social infrastructure across the province, thereby reshaping the image of Binh Duong. Thanks to Becamex's substantial contribution, Binh Duong has emerged as a strong economic hub of the Southern key economic region's quadrangle, which includes Ho Chi Minh City, Dong Nai, and Ba Ria-Vung Tau.

Becamex's growth model takes inspiration from Singapore's experience. In order to create industrial growth drivers towards the north, Binh Duong is determined to establish the Binh Duong Integrated Township - Industrial Park (Integrated Township) model, with adjustments tailored to local characteristics. This model shapes an integrated development framework that includes urban areas, industrial zones, commercial and high-quality entertainment services, residential areas, and resettlement areas for the local population.

This model has created a modern and harmonious residencial environment while providing diverse job opportunities to support industrial development. As a result, Becamex has laid the foundation for Binh Duong to attract millions of workers to reside here, leading to robust growth in factories, enterprises, and supporting sectors such as services, commerce, and logistics. Overall, ecamex has created a well-coordinated, logical, and sustainable development structure for Binh Duong.

The highlight of the model implemented by Becamex in Binh Duong lies in the fact that all the land areas, prior to development, were either degraded or unproductive agricultural lands, located in less favorable locations compared to existing urban areas. However, through the application of the Industrial - Urban - Service model, these once neglected lands have been successfully transformed into well-planned, modern, and livable industrial urban areas.

At the heart of the Integrated Township is Binh Duong New City, where Binh Duong has built a centralized administrative center, the Binh Duong Exhibition and Convention Center, and has invested in a system of internationally standardized schools ranging from preschool to university level, such as Eastern International University. This contributes to shaping a new model, a new heart of the Binh Duong urban area following the Transit-Oriented Development (TOD) model, which defines a new urban concept that revitalizes existing urban areas without sacrificing their traditional values.

 

In its annual report, Becamex proudly stated that the robust growth of an Industrial, Urban, and Service Park is contingent on the expansion and connection of inter-provincial and inter-regional network. As such, the Binh Duong Industrial, Urban, and Service Park project is not solely focused on internal development but is also driving the growth of the surrounding road network. This is intended to foster a system where industrial zones are interconnected as well as linked to international sea ports and airports, thus forming a comprehensive complex that promotes internal, inter-zone, and inter-regional development. All together creates a spreading and proactively synergistic development.

Becamex cũng được biết đến là doanh nghiệp không chạy theo phong trào tăng vốn điều lệ. Từ 2017 đến nay vốn điều lệ Beacmex duy trì trên 10.000 tỷ đồng, trong đó các năm từ 2019 đến nay đều giữ nguyên mức vốn điều lệ 10.350 tỷ đồng.

Tổng tài sản không có nhiều biến động, vốn điều lệ cũng không biến động nhiều trong khi lợi nhuận sau thuế từ 2017 đến nay đều duy trì trên 1.000 tỷ đồng, đạt cao nhất năm 2019 với trên 2.600 tỷ đồng. Năm 2019 cũng là năm Becamex đạt kỷ lục cả về doanh thu lẫn lợi nhuận trước khi bước vào chu kỳ giảm sút.

Trong giai đoạn 13 năm trước cổ phần hóa từ năm 2018, quy mô vốn điều lệ của Becamex tăng 47 lần từ 213 tỷ lên 10.125 tỷ đồng thông qua quá trình tích lũy từ hoạt động sản xuất kinh doanh tự thân của doanh nghiệp qua đó đưa công ty trở thành một trong những doanh nghiệp vốn hóa lớn của HoSE. Tuy vậy sau cổ phần hóa, Becamex giữ ổn định về vốn.

 

Clearly, the Industrial - Urban - Service model is not merely about industrial or urban real estate projects. Instead, this model transforms these projects into strategic initiatives aimed at upgrading the existing urban planning system and industrial system, remodeling current urban areas, comprehensively improving the transportation system, and creating a living environment accessible to all walks of life. In this setup, investors can find skilled labor pools, job seekers are offered plentiful options for the next job, and local residents can stay on their homeland and shift from agriculture to commercial and services. The fruits of this shared growth is equally enjoyed.

 

Becamex: Benefiting from Binh Duong’s support.

As of the end of 2022, Becamex's total assets reached 48,290 billion VND, a decrease of 600 billion VND from the beginning of the year. Nonetheless, the total outstanding debt saw an even steeper reduction, by nearly 1,600 billion VND, down to 30,344 billion VND. The ratio of debt to total assets has remained stable over the years.

Becamex is also known as a corporation that does not follow the trend of increasing charter capital. Since 2017, Becamex's charter capital has remained above 10,000 billion VND. Particularly, from 2019 until now, the charter capital has been consistently maintained at 10,350 billion VND.

 

Total assets have seen little fluctuation, as has the charter capital, while post-tax profits have consistently remained above 1,000 billion VND from 2017 onward, reaching its peak in 2019 with over 2,600 billion VND. The year 2019 also marked a record for Becamex in terms of both revenue and profit, before the corporation entered the downturn.

 

In the 13 years leading up to its privatization in 2018, Becamex's charter capital soared 47-fold, from 213 billion to 10,125 billion VND through accumulation from the corporation's independent business operations. This growth made the company one of the largest capitalized businesses on the HoSE. However, after privatization, Becamex maintained stability in terms of capital.

Notably, the industrial zones developed by Becamex achieve a relatively high occupancy rate. Specifically:

•  My Phuoc 1 Industrial Park, 100% owned by Becamex: Business area of 2.73 million square meters, occupancy rate of 88%.

•  My Phuoc 2 Industrial Park, 100% owned by Becamex: Business area of 3.43 million square meters, occupancy rate of 96%.
•  My Phuoc 3 Industrial Park, 100% owned by Becamex: Business area of 6.7 million square meters, occupancy rate of 90%.
•  Bau Bang Industrial Park, 100% owned by Becamex: Business area of 7.37 million square meters, occupancy rate of 90%.
•  Expanded Bau Bang Industrial Park, 100% owned by Becamex: Business area of 7.55 million square meters, occupancy rate of 68%.
•  Thoi Hoa Industrial Park, 100% owned by Becamex: Business area of 1.53 million square meters, occupancy rate of 85%.

One of Becamex’s key advantages is its significant shareholder, the Binh Duong Provincial People's Committee. With a majority stake, the Provincial People's Committee and Becamex form a close partnership. While Becamex focuses on infrastructure development, the province of Binh Duong benefits from the resulting growth and acts as a supportive entity for Becamex's growth. This distinctive characteristic sets Becamex apart from other Industrial Zone Real Estate Enterprises.

Smart Vision: The 'King' of Infrastructure Development's Ambition in the Digital Economy Er

 Entering 2023, many investors still fail to see the overall development momentum of the economy as numerous challenges persist in Vietnam. In this context, Becamex has recognized the need for a new turning point to bring about change.

 According to Becamex's new direction, the corporation will undergo a model transformation and shape a new ecosystem, aiming to create leverage and seek new driving forces for development in the era of the digital economy and knowledge-based economy. Becamex believes that building a smart industrial foundation aimed at the development of new production methods, will be accomplished through investments in science, technology, and Industry 4.0.

 Based on this perspective, in the context of 2023, Becamex has boldly added the term "Smart" to its existing model of Industrial - Urban - Service. Becamex states that it is crucial to utilize the surplus resources from the successful growth model to upgrade and establish a new one that anticipates the new demands of the era. This is seen as an important step to position the corporation's industrial park development sector at a higher segment in the global value chain, gradually establishing new drivers of economic growth to replace labor and land use intensity, specifically as follows:

 Phase one: Constructing and transforming existing ones into green and smart industrial parks, equipped with 4.0 technology platforms such as IoT, Big Data, AI, etc. This will enable investors to easily deploy smart factory models, facilitating rapid and efficient smart manufacturing.

Phase two: Developing industrial parks closely integrated with science and technology to attract research and innovative activities and institutes for service sectors and digital services.

 

In addition to strengthening key business sectors such as industrial parks and residential real estate, the corporation has completed strategic policies and solutions to enhance its capabilities.

 

In 2023, Becamex sets a goal of achieving a 19% increase in total revenue, reaching 9,460 billion VND. The target for after-tax profit is set at 2,263 billion VND, estimated to rise by 32% compared to the profit achieved in 2022

 

0 billion VND. The target for after-tax profit is set