DIC Holdings' financial report is "more beautiful" thanks to internal transactions

Thanks to the sale of 5,270.9 m2 of land at the Chi Linh Central Area Project (Ba Ria - Vung Tau) to the founding shareholder, DIC Holdings Construction Joint Stock Company has escaped losses in the construction sector and far exceeded the 2023 business plan.

Turn to insider trading when construction is in trouble

In the context of the difficult real estate market, like other companies in the construction industry, DIC Holdings Construction Joint Stock Company (code DC4) was also significantly affected. However, DIC Holdings still had positive business results thanks to the sale of assets in the last days of the 2023 fiscal year.

Specifically, in the construction sector, in 2021, DIC Holdings recorded revenue of VND 513 billion, accounting for 83.6% of total revenue; in 2022, it reached VND 216 billion, accounting for 81.5% of total revenue. However, in 2023, construction revenue was only VND 304.8 billion, accounting for 52.6% of total revenue, a sharp decrease in the proportion of total revenue compared to previous years.

On the contrary, in the real estate sector, in 2022, DIC Holdings recorded revenue of VND 34.35 billion, accounting for 13% of total revenue; in 2023, it reached revenue of VND 263.88 billion, accounting for 45.5% of total revenue. Notably, in the last quarter of 2023, the Company recorded revenue from real estate transfers of up to VND 263.55 billion, accounting for 82.2% of total revenue in the period.

According to research, in late December 2023, Construction Development Investment Joint Stock Corporation (DIC Corp, code DIG) unexpectedly approved the transfer of land use rights for Land Lot A2-1 at Chi Linh Central Area Project (Vung Tau City, Ba Ria - Vung Tau) from DIC Holdings. The land area is 5,270.9 m2, the transfer price is 50 million VND/m2 (excluding VAT), the total estimated contract value is 289.76 billion VND.

Thus, the sudden increase in real estate revenue mainly comes from DIC Holdings transferring the above 5,270.9 m2 of land. If looking at the quality of gross profit by sector in the fourth quarter of 2023, DIC Holdings operated below cost price in the construction sector, leading to a loss of VND 10.17 billion and escaped the loss thanks to the recorded gross profit of VND 201.57 billion in the real estate sector.

In 2023, DIC Holdings recorded a cumulative revenue of VND 579.65 billion, an increase of 119.7% over the same period and a profit after tax of VND 101.97 billion (a loss of VND 2.05 billion in the same period). It is known that the Company has set a business plan for 2023 with a total revenue of VND 510 billion and a profit after tax of VND 2.4 billion.

DIC Holdings is an affiliate of DIC Corp.

DIC Holdings was established in 1994 under the name of Construction Materials Trading Enterprise under DIC Corp. However, as of December 31, 2023, DIC Corp only owns 35.89% of capital at DIC Holdings and accounts for it as an investment in an associate.

DIC Holdings operates in the field of investment and business development of urban areas and industrial parks; investment and business development of housing and urban technical infrastructure, industrial parks, export processing zones, industrial parks, new economic zones. At the time of the latest update on the inventory list (details) on June 30, 2023, the Company's largest inventory of unfinished production and business costs was VND 330.98 billion for the Chi Linh Center Project (belonging to the Chi Linh Central Area Project), VND 84.86 billion for the Ruby Tower Apartment Project...

It is known that the Chi Linh Center Project, invested by DIC Corp, has a total initial investment capital of 1,113 billion VND. Of which, the Chi Linh Center Project has an area of 7,482 m2, a height of 25 floors, including 600 apartments, with a total investment capital of about 960 billion VND. The Ruby Tower Project has a total investment capital of 100 billion VND, with a height of 15 floors.

Thus, thanks to DIC Corp being the founding shareholder and still being a major shareholder at DIC Holdings, DIC Holdings is still implementing many projects related to DIC Corp, as well as receiving land funds and implementing component projects in large-scale mega-projects invested by DIC Corp.

The sale of land fund at Chi Linh Central Area Project in the fourth quarter of 2023 helped DIC Holdings record extraordinary profits in this quarter and the whole year of 2023. This is essentially an internal transaction between related units instead of selling to an external partner.

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