Kinh Do Shelves Lavenue Crown Project, For Now

Tran Le Nguyen, general director of Kinh Do, ascribed this decision to the gloomy outlook for the real estate market.

The developer of Lavenue Crown is Lavenue Investment Co., a joint venture between Kinh Do with a 50% stake, and two partners being HCMC Housing Management & Trading Co. and Mayflower Investment Co. The 36-floor project covers 4,900 square meters of land on Le Duan Boulevard in District 1.

Kinh Do has also decided to suspend other property projects so that it can focus its resources on the food sector by launching new products like instant noodles, cooking oil and dairy items.

In the second quarter, Kinh Do announced a huge loss from financial divestments and decided to restructure its investments towards the food industry.

In the coming time, Kinh Do will invest in instant noodles, cooking oil and milk, in which an instant noodle product is set for debut in November, said Nguyen.

He did not reveal whether these product lines would be produced by Kinh Do or its strategic partners. However, having its products made by others is already part of this confectionery maker’s business operations.

Although there is strong competition in these three product lines, their markets still have room for more producers because these are consumer necessities, said Nguyen.

Despite tough times, instant noodles and cooking oil still record a high growth rate, from 15% to 20% per year, while the dairy processing industry is considered a large market for producers and importers. This is why Kinh Do wants to expand business into these three segments.

In the business plan for 2012, Kinh Do targets VND5.5 trillion in revenue, 30% higher than in 2011, and VND500 billion in pre-tax profit, up 43%.

In its second-quarter financial statement, Kinh Do claimed a loss of VND5.4 billion in the first six months of the year due to stake transfer. Specifically, Kinh Do suffered a net loss of over VND71.3 billion from a transfer of its stake in Nutrifood.

However, as for its major products, food and confectionery, Kinh Do still recorded sales growth in the first half of the year despite economic woes and lower demand. In particular, the company obtained an after-tax profit of more than VND65.9 billion for the first six months.

Moreover, the food-confectionery industry often relies on the final months. Moon cake sales, although being a seasonal business, generates high profit for Kinh Do.  Moon cake sales volume this year has surged 15% against last year’s Mid-Autumn season, exceeding the target of the company.