VNG Corporation (VNG) must plan to reduce its trillion-dong loss to 378 billion VND.

VNZ's long slide, the highest priced stock on the Vietnamese stock market

VNG Corporation is a unit that is often mentioned by the media as Vietnam's technology unicorn. Its shares also moved to UPCoM in February 2023 and stunned investors when their price skyrocketed from VND240,000/share to VND1.35 million/share. This is a record price that no stock on the Vietnamese stock exchange has ever achieved.

In contrast to the soaring stock price, VNG's business results over the past two years can be summed up in two words: "loss".

The company with the highest stock price in Vietnam has to plan to reduce its market capitalization to VND378 billion. — VNG Corporation (VNZ), once a billion-dollar technology unicorn of Vietnam, is now facing a trillion-dollar loss (Photo TL)

Specifically, in 2021, the company recorded revenue of up to 7,649 billion VND, with a loss after tax of 72 billion VND. Entering 2022, the company's revenue continued to increase slightly to 7,801 billion VND, but the loss after tax was up to 1,534 billion VND.

On VNG's audited financial statements, it can be seen that although recorded revenue is very high, the company's cost of goods sold also accounts for 4,364 billion VND in 2022. Accompanying costs such as sales costs and business management costs are also very high, up to 2,728 billion and 1,579 billion VND, respectively.

High costs caused VNG to incur losses of up to VND942 billion in its core business. This means that the more VNG does business, the more it will lose. After deducting other expenses and taxes, VNG recorded a consolidated loss of up to VND1,534 billion, and a loss for the parent company of VND1,077 billion in 2022.

This is completely contrary to investors' expectations of a Vietnamese technology unicorn with a price of up to a million VND per share. In the trading session on June 18, 2023, VNZ code was priced at 755,000 VND/share, down nearly half compared to the peak reached when it first transferred to the floor in February 2023.

From a loss of thousands of billions, VNG is having to make plans to reduce the loss to 378 billion VND due to spread out investment.

Last week, VNG's Board of Directors announced the revised document of the annual general meeting of shareholders scheduled to take place on July 7, 2023 with some notable contents. In which, VNG set a revenue target of up to VND 9,281 billion in 2023.

Contrary to the revenue target of increasing by 19% compared to 2022, the company has not yet been able to set a profit target in 2023. VNG's annual after-tax profit plan is only to reduce the parent company's loss from VND 1,077 billion to VND 378 billion.

At the same time, VNG's board of directors also submitted to the General Meeting of Shareholders a plan not to pay dividends in 2022 to keep cash resources to invest in strategic business areas such as e-wallets, payment gateways, game copyrights, AI development...

Finally, the Board of Directors also submitted to shareholders a change in the plan to handle 7.1 million treasury shares. At the 2022 General Meeting of Shareholders, these shares were approved for sale to professional securities investors through private placement, but have not been implemented yet. Therefore, the Board of Directors submitted to shareholders for consideration a change in the plan to handle these shares.

From VNG's 2023 business plan, it can be seen that the company is pursuing too many fields, investing widely with a huge investment capital. It is not difficult to understand that the company's 2023 goal is only to reduce losses. With such gloomy business results, it is unknown when VNZ stock code will be able to recover to its peak price.

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