Hoa Binh Construction (HBC): Auditor unable to verify VND 4.8 trillion in assets; management comments

Audit firm AFC Vietnam Limited has issued a qualified audit opinion on Hoa Binh Construction Joint Stock Company (HBC), citing insufficient debt confirmations collected during the audit process.

Qualified opinion: unverified debt balances

The audit states that the total value of items that could not be verified exceeds VND 4,800 billion, accounting for about 30% of total assets. The unverified balances include:

• VND 1,418 billion in short-term receivables from customers
• VND 533 billion in prepaid amounts to suppliers
• VND 671 billion in other short-term receivables
• VND 1,482 billion in short-term payables to suppliers
• VND 618 billion in customer advances not yet audited for verification

Company explanation

In its response, HBC’s leadership said the audit timeline was limited. The company also noted that the number of customers, suppliers, and subcontractors is very large, creating objective constraints in obtaining confirmation letters. HBC further stated that, for the current debtor balances, it has sufficient evidence—including business contracts and financial invoices—to recognize the balances in accordance with applicable regulations.

Financial performance and cost pressure

Based on HBC’s financial statements, net revenue reached VND 4,620 billion, with gross profit of VND 304 billion. However, interest expense for the year totaled VND 383.8 billion. The company’s gross profit from core operations was not enough to cover interest expense to lenders.

Consolidated net profit after tax was VND 250 billion, mainly attributed to finance income and other income.

High interest expense linked to borrowings

Interest expense remains high due to total borrowings and short-term finance leases of VND 3,939 billion.

Liquidity strain and equity impact

Liquidity was affected as VND 10,553 billion of assets are tied up in receivables. Total liabilities were VND 14,144 billion, while accumulated losses of VND 2,084 billion reduced consolidated equity to VND 1,957 billion.

Management plans for 2026

Despite financial pressures, HBC plans to present at its annual general meeting by the end of June 2026 a revenue target of VND 10,000 billion, up 116% from 2025. Net profit after tax is expected to remain flat at VND 250 billion.

Backlog and project pipeline

Management said the growth basis is the backlog—contracts signed but not yet performed—reported to be over VND 10,000 billion for 2026, according to information disclosed in Q3 2025. The backlog is expected to provide work to support revenue in the next cycle.

The company also expects growth from expanding abroad, including the start of two large-scale infrastructure projects in Cambodia. Domestically, HBC plans to strengthen its capacity to invest in and operate social housing and renovate old apartment blocks across multiple provinces.

Cash flow measures

On cash flow, HBC plans to accelerate debt collection through legal measures and aims to secure debt restructuring agreements soon to ensure working capital for new projects.