The Vietnamese textile giant once had 4,000 employees but now has only 31. The company has no orders yet, is looking for European and American partners to restore the garment industry and wants to recover its investment in real estate.
Withdrawing from real estate, restoring 1,200-worker factory in Quang Nam
On December 5, Garmex Saigon Joint Stock Company (GMC) announced information on production and business situation and plan to restore main production and business.
Garmex Saigon said that in 2023, due to low unit prices and no orders, the company temporarily stopped its main production and business activities. The company has restructured its workforce, only retaining a number of employees in the business planning, engineering, accounting, warehouse, electromechanical, and machinery and equipment departments to manage assets, inventory, and seek orders.
According to the third quarter financial report, by the end of October, Garmex Saigon had only 31 employees. Previously, at its peak from 2017-2021, this enterprise had up to 4,000 employees. By the end of 2021, Garmex Saigon had about 2,000 employees. By the end of September 2023, the number of employees was only 37 and by the end of March 2024, it was 34.
Recently, Garmex Saigon continues to liquidate assets, trucks, cars, carton boxes, schematics, all kinds of threads, raw materials for the garment industry... But it revealed that the company "is not completely liquidating" and is "ready to restore production when conditions are favorable".
GMC said it is monitoring and urging its affiliated company, Phu My JSC, to complete the Phu My Housing Project to sell products to recover investment capital. Due to the lack of textile orders after the Covid-19 pandemic and the chain shock from its major partner Gilimex, which was suddenly cut off by the giant Amazon, in 2023 GMC switched to real estate.
According to the third quarter financial report, Garmex Saigon contributed more than VND 21 billion to Phu My Company, equivalent to 32.47%. The fair value is estimated by GMC to remain unchanged at the end of the third quarter of 2024.
In addition, Garmex Saigon is in contact with customers and if there are orders, it is expected to deploy the Quang Nam factory in March 2025. If all goes well, GMC will restore this factory with 1,200 workers by the end of next year.
Continuous losses, is the plan to return to the main profession feasible?
Garmex Saigon has a capital scale of 330 billion VND. According to the audited financial report, GMC lost more than 84.7 billion VND in 2022 and more than 51.9 billion VND in 2023. In the first 9 months of 2024, GMC lost nearly 8 billion VND. GMC lost money even though it stopped production and liquidated many assets, due to the costs incurred for more than 30 employees to manage assets, inventory and continue to seek orders.
The announcement of wanting to recoup capital from Phu My and the estimated fair value of the investment in this real estate company remaining unchanged compared to the amount invested shows that the real estate sector is not easy to make a profit. Recently, a series of real estate businesses have encountered difficulties in sales, heavy debt burden, high interest rates...
GMC’s “diversification of business to avoid risks” orientation seems to be ineffective. Recently, GMC has been involved in “blanket sewing” and pharmacy business or logistics plan… but “revenue is insignificant”.
According to the financial report, in the first 9 months of 2024, GMC recorded a revenue of more than 474 million VND, equivalent to less than 1.8 million VND per day. In the past, GMC had 7 years of revenue from 1,400-2,000 billion VND/year, before dropping to more than 1,000 billion VND in 2021, 292 billion VND in 2022 and 8.3 billion VND in 2023.
Revenue is falling, losses are constant, opening new fields with no positive prospects..., so is the plan to return to the main profession, the garment industry, feasible?
Despite having no orders after the Covid-19 pandemic and a loss of revenue from partner Gilimex, GMC has controlled costs very well. Losses have decreased rapidly. Meanwhile, financial health is still quite good.
As of the end of the third quarter of 2024, GMC had cash and cash equivalents of nearly VND 77 billion, of which VND 66 billion was deposited in savings of less than 3 months at 3 banks. In addition, there was more than VND 4.3 billion in deposits of more than 3 months.
By the end of October 2024, GMC had no debt or financial lease. Total liabilities were quite low, less than VND 10 billion. Owner's equity reached nearly VND 388 billion.
GMC's risk is probably in the inventory of more than 133 billion VND and the provision for price reduction of more than 35 billion VND. In addition, there are still nearly 139 billion VND in fixed assets. However, these may be necessary assets for GMC to restore production when there are orders. Ineffective assets have been liquidated by GMC.
Thus, the biggest difficulty for this once-famous garment company in Ho Chi Minh City is finding partners to place orders. Laying off workers helps GMC control costs but will make it difficult to sign contracts with partners.
Garmex Saigon, established in 1976, is a famous garment enterprise in Ho Chi Minh City with more than 20 years of operation. This is also an early equitized enterprise (in 2004) and listed on HoSE in 2006.
GMC has 5 factories with a total area of over 10 hectares with 70 production lines with large market share and working with many international brands.
GMC shares have fallen sharply over the past 3 years, from VND22,000 to VND7,600/share as of now.
Source: https://vietnamnet.vn/4-000-nhan-vien-con-31-chan-dia-oc-dai-gia-muon-thu-von-quay-ve-nghe-chinh-2349113.html
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