Fecon (FCN) did not issue enough bonds as planned.
Fecon Corporation (Code FCN) has just announced the completion of the issuance of bond lot FCNH2325001. This is a bond lot worth 126 billion VND, 18-month term with a fixed interest rate of 11%/year.
Bond lot FCNH2325001 was issued on October 31, 2023, completed issuance on December 31, 2023 with maturity date of April 30, 2025.
This is a non-convertible bond lot, without warrants and secured by assets including: 1.5 million shares of FECON Joint Stock Company (FCN); 10,279,000 shares of FECON SOUTH Joint Stock Company (FCS); 10 million shares of FECON Energy Joint Stock Company (FCP); 15,604,000 shares of FECON RAITO Underground Construction Joint Stock Company (FRU) and 7 million shares of FECON Investment Joint Stock Company (FCI) owned by the Guarantors/Mortgagors.
Completing only 1.2% of the yearly plan, Fecon could not sell all bonds as expected (Photo TL)
Initially, the bond lot was expected to be issued with a volume of 1,500 bonds with a face value of VND 100 million/bond, equivalent to an issuance value of VND 150 billion. However, the actual issuance volume was only 1,260 bonds, equivalent to a value of VND 126 billion. This is one of the rare cases where 100% of the expected volume was not issued in the Vietnamese corporate bond market.
Business is downhill, only 1.2% of target was completed in the first 9 months of the year
Fecon is a reputable unit operating in the field of foundation and underground construction. However, Fecon's business picture in 2023 recorded a long slide.
In the first quarter of 2023, Fecon's revenue reached 609.1 billion VND, gross profit was 122.9 billion VND. Profit after corporate income tax reached 2.8 billion. However, the company recorded a loss after tax for parent company shareholders of up to 7 billion VND.
In the second quarter of 2023, net revenue reached 674 billion VND, gross profit 124.9 billion VND. Net profit from business activities decreased compared to the previous quarter, only 3.9 billion VND. Fecon lost after tax 1.4 billion VND in this quarter.
In the third quarter of 2023, Fecon's revenue only reached 547.6 billion VND, down 17.6% over the same period. Gross profit was only 80.1 billion VND, causing the company to have a net loss from its main business activities of 655 million VND. At the end of the third quarter, Fecon only made a symbolic profit of 213 million VND, down 71.5% over the previous year.
Accumulated revenue in the first 9 months of the year, Fecon recorded revenue of 1,830.3 billion VND, profit after tax was only 1.6 billion VND. With this result, the company has only completed 48.2% of the revenue plan and 1.2% of the annual profit plan.
Under debt pressure, Fecon still increases bond issuance
Looking at the Q3 business results, it can be seen that the pressure of interest rates is affecting Fecon's profits. From 2017 to 2022, Fecon's short-term debt has continuously escalated. The amount of short-term debt has increased from 530 billion to 1,767 billion VND in just these 5 years.
As of the end of the third quarter of 2023, the company's short-term debt continued to increase by 11.6%, recording VND 1,971.2 billion. Long-term debt decreased slightly to only VND 904 billion. However, total short-term and long-term debt still increased by VND 467 billion compared to the beginning of the year.
It can be seen that from 2018 onwards, following the increase in debt, Fecon's profit has only decreased, not increased. In 2018, Fecon's profit after tax was recorded at 249 billion VND. In the following years, Fecon's profit after tax continuously decreased to only 52 billion VND in 2022.
By 2023, the business situation became even more gloomy when the company only recorded an accumulated profit of 1.6 billion VND, equivalent to completing 1.2% of the annual profit plan. In this context, Fecon's continued increase in bond debt really made investors concerned. And as a result, the recent bond issuance only had 1,260 bonds successfully issued out of the expected volume of 1,500 bonds.
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