HBC Q2 2026 Net Profit Falls 55% Despite Revenue Surge

Overview

Hoa Binh Construction Group (HBC) reported Q2/2026 net profit of nearly VND 18.9 billion, a 54.8% decline year-on-year, despite revenue surging 108% to VND 1,946.5 billion. The profit drop is attributed to the absence of gains from fixed asset liquidation that boosted the prior-year quarter. The results underscore ongoing margin pressure and a slow start to the company’s 2026 profit target.

Key Facts

• Q2/2026 net profit: VND 18.9 billion, down 54.8% from Q2/2025.
• Q2/2026 net revenue: VND 1,946.5 billion, up 108% year-on-year.
• Construction services revenue: VND 1,275 billion (+48.5%); real estate sales and services: VND 581.1 billion (15x year-on-year).
• Gross profit: VND 222.4 billion, 3.7x higher than Q2/2025.
• Other income fell from VND 138.1 billion to VND 9.5 billion due to no fixed asset liquidation gains.
• H1/2026 net profit: VND 41.6 billion, down 19.1% year-on-year; revenue: VND 3,268.6 billion (+99.7%).
• HBC achieved only 16.6% of its 2026 after-tax profit target of VND 250 billion.
• Accumulated losses as of June 30, 2026: VND 2,026 billion.

What Happened

Hoa Binh Construction Group (HBC), listed on UPCOM, released its consolidated financial statements for Q2/2026, showing a sharp profit decline despite robust top-line growth. Net revenue reached VND 1,946.5 billion, up 108% from the same period last year, driven by a 15-fold surge in real estate sales and services revenue to VND 581.1 billion, while construction services revenue grew 48.5% to VND 1,275 billion.

However, net profit fell 54.8% to VND 18.9 billion, primarily because the company did not record any gains from fixed asset liquidation in the quarter, compared to VND 138.1 billion in other income in Q2/2025. Financial costs rose 3.6% to VND 99 billion, and selling expenses increased to VND 16.1 billion, though administrative costs declined 16.8% to VND 78 billion. For the first half of 2026, net profit was VND 41.6 billion, down 19.1% year-on-year, on revenue of VND 3,268.6 billion.

Market Context

HBC shares closed at VND 4,200 on July 31, 2026, reflecting a low valuation amid persistent losses and high leverage. The company’s total assets stood at VND 16,885.7 billion, with receivables accounting for 65.2% of the balance sheet, indicating ongoing working capital strain. Inventory rose 40% to VND 3,195.3 billion, while long-term assets under construction fell sharply as the Ascent Plaza project was completed. The construction sector in Vietnam remains competitive, with margins under pressure from rising input costs and delayed payments.

Strategic Significance

HBC’s Q2 results highlight the company’s transition from one-off asset sales to core operational profitability. While revenue growth is strong, the low net margin (under 1%) underscores structural challenges in the construction industry, including high financial costs and receivables risk. The company’s ability to meet its 2026 profit target of VND 250 billion will depend on improving project execution, reducing receivables, and controlling costs. The reduction in long-term work-in-progress suggests progress on key projects, but the high inventory and receivables levels remain a concern for long-term investors.

What to Watch

• Q3/2026 earnings release: Monitor whether revenue growth translates into higher net profit margins.
• Receivables collection: Track changes in short-term receivables, especially from major counterparties like Matec and Đất Phương Nam.
• Progress on 2026 profit target: Assess quarterly profit accumulation against the VND 250 billion annual goal.
• Inventory levels: Watch for further increases in inventory, which may indicate slower project handovers.
• Debt management: Monitor total liabilities, which rose 5.1% to VND 14,867.7 billion, and any refinancing or equity-raising plans.