"Changing mindset is the most important part in complete restructuring company”
TTC Land’s Chairman said that the definition, the viewpoint view of complete restructuring company has been becoming clearer and stronger because of the internal problems and rapid changes in the real estate market.
TTC Land's chairman said that the real estate market depends too much on external and unpredictable factors, which are mainly real estate legal issues.
Mr. Nguyen Dang Thanh, former Deputy General Director of Sacombank, was appointed as the Chairman of the Board of Directors cum General Director of Saigon Thuong Tin Real Estate Joint Stock Company - TTC Land (SCR) in the context that TTC Land was in need to “make over” in order to promote the potentials and advantages as well as to avoid financial shocks that hinder the development of TTC Land.
In the occasion of Vietnamese Entrepreneur's Day- October 13th, 2019, Mr. Nguyen Dang Thanh shared about the emerging trend in 2019 - the complete restructuring trend of private corporations.
In 2019, TTC Land or large private corporations continuously announced the message of "complete restructuring", especially large real estate corporations. In your opinion, is this a right time for corporations to fully restructure? Is the need for complete restructuring due to internal problems or external factors or if there are market factors that force them to restructure?
I think maybe both. Because the real estate market now has changed a lot compared to before. The market covers the legal framework, customer’s tastes, the way customer evaluate products.
With the rapid changes happening in the market, especially the changes and adjustments in the legal framework, it is compulsory for enterprises to build up business strategies based on their core competencies and specific models but not on their only advantages. This can be considered as both an opportunity and a challenge, which forces leaders to put the restructuring viewpoint into company control and management.
Moreover, previously, the real estate market had many difficulties and the supply-demand relationship was seriously imbalanced. Housing demand of Vietnamese people is generally very high, but most projects have been delayed because of various reasons. Obviously, real estate enterprises could work in their old style anymore.
I think the concept and the viewpoint of restructuring is becoming clearer and stronger due to both external and internal reasons. The internal factor requires a new and different way of working, for example, previously lot splitting of land for sale was also called real estate venture, which also included building an apartment, calculating the area, multiplication and selling, but now, the requirements and demands of customers are higher, the products created for the market must be different.
Previously, when apartment being mentioned, people would imagine the ground floor is a parking lot, above which are the apartments and that's it. However, for the moment the concept of apartments must be integrated into the living environment and community. Investors who excellently work out this thing will succeed.
There is no exception for TTC Land when starting the "makeover" journey after annual meeting in April 2019. Thus, before joining the company, according to you what is the most critical issue to prioritize in TTC Land’s restructuring process? After 6 months, has your perspective changed?
Before joining TTC Land, I understood that there would be certain challenges for a real estate enterprise in general and for TTC Land in particular, which include many areas such as: project legal, project development, investment and so on. Therefore, I also set up a specific schedule accordingly.
When joining into any field, firstly I focus on is setting specific goal, plan, roadmap and during working in other areas I still can control the plan. When we can control the plan, to foresee the results as well as when the results are in direction, it will certainly give us great motivation.
However, during time participating in TTC Land and being deeply involved in the real estate field, I found out many things that I have planned but still could not control in the best way. That is the truth, because it depends too much on external factors that I could not predict. The main issues are still relating to real estate legal and the situation that the authorities become more cautious and hesitated than before. Currently, it looks like everything is running then stops immediatly that pulls everything to one side, creating shocks and many arising issues to solve.
Basically after 6 months, the difficulties and challenges of the company have been clearly identified and we had solutions for each specific problem. In the next 3 - 6 months, the company will really take a new step forward. The development of TTC Land in the future will follow the policies that the Board of Directors set up after the General Meeting of Shareholders in April 2019.
As you said, in the next 3-6 months TTC Land will have a new development step, so May you share with us what is the basis for this assessment? And in its complete restructuring process, does TTC Land prioritize any segments?
The assessment that TTC Land will have new development step in the next 3-6 months is relied on its own firm bases.
Particularly, for the moment we organize meeting on average 2-3 partners every week, to discuss all aspects and plans relating to project development cooperation and financial solutions. There are many formats in restructuring: capital restructuring, debt restructuring, business cooperation, transfer, etc. Until now, TTC Land has gained positive initial results.
Through discussions, meetings, signed agreements and MoU (MOU), I believe that in the next 6 months, TTC Land will have very specific results.
From that restructuring plan, TTC Land will take the second step with longer-term orientation in finance because when it mentions real estate, it refers to cash flow and financial restructuring that must eventually result in money efficient. We are improving the project's financial management to follow the practices more strictly. Therefore, when it says 3-6 months is based on the currently ongoing results.
Regarding of the priority in restructuring, I think that with the speedy development of the digital world it is inappropriate to work on one by one. We need to work on many at the same time including restructuring human resources - finance - land fund - product structure and so on, because if we would like to have good financial results, we also need to have good personnel to deploy. If we would like to have good personnel, we must have strong financial structure/financial strength to attract them. On the other hand, land fund development and product development require both financial and human resources as basic factors. Accordingly, when it comes to transformation or restructuring, it must be complete transformation.
I still prefer to use the word "transformation" over “restructuring”. The word “transformation” is more suitable because the transformation here includes finance, land fund, products, personnel, which are visible. In fact, after all those changes is the changing in mindset.
Accordingly, are the land fund and product strategy included in TTC Land's restructuring strategy?
For the moment, almost all real estate enterprises across the country are facing legal issues that even only 1m2 is also called legal case. In order to accelerate market development, the economy needs to have ways to solve this issue effectively.
Currently, TTC Land has developed about 33 projects in both large scale and small scale, with a total land fund of 1,800ha of which 15 projects have been implemented. In addition, TTC Group also has invested in industrial real estate and resort real estate projects. TTC Land are temporary focusing on the residential real estate development and determine to do our best in this segment. In the future, TTC Land will have many chances to expand to other directions, there may be many movements that the nature called M&A will bring better value to TTC Land.
Source: VnEconomy
