Fecon (FCN) has not even achieved 1% of its target, where does it get the money to do 4 new projects that have won the bid?

Fecon (FCN) only completed 1% of the set target in the first half of the year.

In early 2023, Fecon Joint Stock Company (code FCN) set a relatively modest target with planned revenue of VND 3,800 billion, an increase of 24% compared to 2021. Target profit after tax is VND 125 billion, an increase of 142.2%.

However, the second quarter has ended and the third quarter is almost over, but the results that Fecon has achieved have not shown any positive signs.

In the first quarter of 2023, Fecon achieved revenue of 609.1 billion VND, with after-tax profit of only 2.8 billion VND. Entering the second quarter of 2023, the situation not only did not improve but also went backwards.

Fecon (FCN) only achieved 1% of the plan even though half a year has passed, how can it confidently accept 4 500 billion projects? (Photo TL)

Fecon's revenue in the second quarter of 2023 reached VND674 billion, down 35.1% year-on-year. However, cost of goods sold accounted for VND549 billion, gross profit reached VND124.9 billion, gross profit margin reached 18.5%.

During the period, financial revenue decreased by nearly half, to only 5.2 billion VND. Meanwhile, interest expenses accounted for 70.6 billion VND, up 33.7% over the same period. This is a sign that Fecon is having to increase its debt, and interest pressure weighs heavily on revenue.

Sales expenses and administrative expenses in the second quarter reached VND5 billion and VND49.5 billion, respectively. After deducting all expenses and taxes, Fecon recorded a loss after tax of VND1.4 billion. Fecon's accumulated profit after tax for the whole 6 months was only VND1.3 billion.

Compared to the plan set at the beginning of the year, Fecon has only completed 33.8% of the revenue plan and 1% of the annual profit plan.

Only completing 1% of the business plan in half a year, Fecon is still confident in receiving 4 new bidding projects?

Despite the poor business results, Fecon still won 4 large contracts worth up to 500 billion VND. Specifically, Fecon announced that it received 4 contracts including:

The package "providing, constructing mass piles and testing piles" at the Nhon Trach 3&4 power plant project with a total value of 179 billion VND; the package "constructing the southern diaphragm wall of station 11" worth more than 62 billion VND under the pilot urban railway project (metro line 3) of Hanoi City; a contract worth 75 billion VND at the Vung Ang II thermal power plant project (Ha Tinh); the package "constructing the section Km91+800 - Km114+200" worth 147 billion VND.

Fecon won 4 bid packages with a total value of 500 billion while its business results in the first half of 2023 only barely escaped losses and reached 1% of the set target.

In addition, in the past 4 years, the profit of this unit has continuously witnessed a decline. Specifically, from 2019 - 2022, Fecon's after-tax profit has decreased sharply from 211.6 billion to only 51.3 billion VND in 2022. This situation continues to occur in the first half of 2023 when the recorded profit is only 1.3 billion VND.

If there is no unusual breakthrough, Fecon will certainly break its 2023 business plan and mark the 5th consecutive year of profit decline.

Short-term debt increased by 324 billion VND in just 6 months

As of the end of the second quarter of 2023, Fecon's total assets reached VND 7,686.2 billion. Of which, a very large amount is recorded as receivables. The amount of receivables accounts for VND 3,017.4 billion, equivalent to 39.2% of total assets.

Accounts receivable from customers also accounted for 1,741 billion VND. Inventory increased from 1,669.3 billion to 1,739.3 billion VND.

Regarding Fecon's capital structure, it can be seen that the main source of capital of this unit is debt, accounting for 4,278.3 billion VND, equivalent to 55.7% of total capital. In which, short-term debt tends to increase by 324.3 billion VND compared to the beginning of the year, up to 2,091 billion VND.

Fecon's total short-term and long-term debt is currently VND 2,962.2 billion, almost as high as its current equity.

Fecon's equity is currently VND3,407.9 billion. Of which VND1,574.4 billion is equity. The company has a development investment fund of VND343.6 billion and undistributed profit after tax has dropped sharply to only VND91 billion.

Source: https://www.congluan.vn/chua-dat-noi-1-muc-tieu-de-ra-fecon-fcn-lay-tien-dau-lam-4-du-an-moi-trung-thau-post265270.html