CC1 just reported a loss, only completing 2.5% of the year plan.

The VIETUR consortium has just entered the next round with the 5.10 package of Long Thanh airport with a value of 35,000 billion VND. This incident is also attracting public attention because VIETUR's competitor, the Hoa Lu consortium, is also urgently appealing about the bidding results this time.

The VIETUR consortium is led by IC Holding Company (Türkiye), consisting of 10 enterprises including: Ricons, Newtecons, Sol E&C, Construction Corporation No. 1, ATAD, Vinaconex, Phuc Hung Holdings, Hawee Electromechanical and Hanoi Construction Corporation. Of which, Ricons, Newtecons and Sol E&C are three enterprises in Mr. Nguyen Ba Duong's ecosystem.

Notably, Construction Corporation No. 1 (CC1) is a unit with relatively good business results with 10 consecutive quarters of profit reporting. However, as soon as the VIETUR joint venture entered the next round, CC1 immediately reported a loss after tax of VND 2.5 billion in the second quarter of 2023.

Q2 loss of 2.5 billion VND, ending CC1's 10 consecutive quarters of profit

According to the consolidated financial statements for the second quarter, CC1 recorded revenue of VND 1,236.6 billion, down 22% year-on-year. However, compared to the first quarter, CC1's revenue grew relatively well. Gross profit for the second quarter reached VND 108.8 billion, down 8% year-on-year.

Vietur CC1 joint venture member just finished the Long Thanh airport construction project, photo 1 — CC1 reported a loss of 2.5 billion VND in the second quarter, and only completed 2.5% of the profit plan after half a year (Photo TL)

Financial revenue in the period decreased by 21%, down to only 76 billion VND. Meanwhile, financial expenses remained high at 132.1 billion VND. Most of which was interest expense at 125.2 billion VND.

Sales expenses during the period were significantly reduced, from 7.9 billion VND in the same period to just over 214 million VND. Business management expenses decreased by nearly 1/3, from 68 billion VND to just 44.5 billion VND. After deducting all expenses and taxes, the profit after corporate income tax was negative 2.5 billion VND.

This is the first quarter that CC1 has reported a loss because this unit has reported profits consecutively for the previous 10 quarters.

CC1's accumulated revenue in the first 6 months of the year reached VND1,782.4 billion, down 35.6% over the same period. Profit after tax reached VND5.8 billion, down 80.5%. Compared to the set target, CC1 has only completed 16.6% of the revenue plan and 2.5% of the annual profit plan.

Debt exceeds equity, CC1's business cash flow is negative 814.9 billion VND

By the end of the first quarter of 2023, CC1's total assets reached VND14,415.4 billion, a slight decrease compared to the beginning of the year. Of which, cash and cash equivalents decreased by nearly half, down to only VND897 billion. Bank deposits also recorded only VND275.8 billion.

CC1's receivables are relatively large, amounting to VND6,906.5 billion. Of which, the company still has to pay short-term sellers VND4,696.2 billion.

Regarding capital structure, the company is using most of its capital from payables, accounting for VND 10,362.7 billion, equivalent to 71.9% of total capital. Of which, short-term debt accounts for VND 2,048.5 billion, down more than VND 150 billion compared to the beginning of the year.

However, the amount of long-term debt accounts for 4,580.5 billion VND. The total amount of short-term and long-term debt of the company is up to 6,629 billion VND. This debt is currently 1.5 times higher than the equity of CC1.

By the end of the second quarter, CC1's equity reached VND4,052.7 billion. Of which, the owner's investment capital reached VND3,289.3 billion. Undistributed profit after tax was VND362.4 billion. The fact that equity is much lower than debt, especially debt, shows potential risks in the company's capital management.

In addition, CC1's net cash flow from operating activities is also negative at VND814.9 billion, while in the same period last year it was negative at VND2,343.1 billion. This shows that the cash flow from operating activities is not enough to cover CC1's daily operations. To make up for the shortage, the company will have to increase its borrowing. Thus, the debt structure in CC1's assets will continue to expand.

Source