'Carrying' a debt of 3,600 billion, Saigontel (SGT) has only completed 4.8% of the set plan.

Escaped loss thanks to financial revenue, only completed 4.8% of the set target

Formerly a telecommunications infrastructure service provider in industrial parks under the Saigon Investment Group, Saigon Telecommunication Technology JSC - Saigontel (SGT) is investing in the field of developing Industrial - Urban - Service complexes. However, the business results in the first 6 months of the year were just enough to avoid financial revenue losses. Net profit even decreased by 25% after audit.

In terms of sales revenue, SGT reached VND361 billion in the first 6 months of 2024, down 25.1% year-on-year. Gross profit was VND79 billion, down 22.5%. Gross profit margin was recorded at 21.9%.

Saigontel (SGT) escaped losses thanks to financial revenue. Pressure from interest expenses caused the company to only complete 4.8% of its target (Photo TL)

Notably, financial revenue increased nearly 4 times compared to the same period, reaching 46.2 billion VND. Interest income from deposits and loans decreased from 12 billion to only 7 billion VND. However, profit from investment trust activities suddenly appeared during the period, recording nearly 39 billion VND. This is SGT's largest financial revenue.

On the other hand, financial expenses also increased to VND44.8 billion, of which nearly VND40 billion was interest expense. Saigontel's interest payable tended to increase compared to the same period. In addition, the company's securities investment is also temporarily recording a loss of VND5 billion.

Regarding business management costs, costs for management staff suddenly increased by 65%, accounting for 22 billion VND. Meanwhile, other costs and office supplies costs decreased. Thus, SGT still increased the payment for management staff despite business results declining compared to the previous year.

Profit after corporate income tax reached more than 13 billion VND, down nearly 40% compared to the same period. Compared to the annual business results, SGT has only completed 4.8% of the set target.

With debt exceeding equity, how does SGT "bear" interest costs?

From the business results, it can be seen that interest expense is a big problem for Saigontel. Just counting the interest payable is almost as high as the business management cost and "blew away" more than half of the gross profit, not to mention the principal debt payable.

SGT's total assets as of the end of the second quarter of 2024 reached VND 7,182 billion. Most of which is in inventory, accounting for nearly VND 3,000 billion.

This inventory asset is mainly the cost of unfinished production and business at projects including: Nam Tan Tap Industrial Park Project with 1,429 billion VND; Cost of Dai Dong Hoan Son 2 Industrial Park Project with 575 billion VND; Cost of Tan Phu 1 and Tan Phu 2 Industrial Park Projects accounting for 358 billion and 343 billion VND respectively.

Regarding investment activities, SGT is also contributing long-term capital of VND1,380 billion to joint ventures and associated companies. Along with that is a securities investment of more than VND300 billion for which SGT has just recorded a provision for a decrease in value of nearly VND5 billion.

Most of the capital to implement the above projects is from loans. In the capital structure, payable debt accounts for 5,205 billion VND, 2.6 times higher than equity.

Short-term debt accounts for 1,607 billion VND, long-term debt also accounts for 2,018 billion VND. SGT's total short-term and long-term debt is 3,625 billion VND, accounting for more than half of the company's total capital and 1.8 times higher than equity.

Maintaining a loan source of thousands of billions caused SGT to face big problems when interest expenses increased higher than the previous year. This indirectly affected cash flow, causing the company to not earn enough to cover expenses, with a negative operating cash flow of nearly 230 billion VND.

In the first 6 months of the year, SGT borrowed an additional 852 billion VND but only paid back the principal of 595 billion VND. Thus, the company not only did not reduce its debt but also borrowed more, causing the huge debt to increase to more than 3,625 billion VND.

Source: https://www.congluan.vn/ganh-khoan-no-3600-ty-saigontel-sgt-moi-hoan-thanh-48-ke-hoach-de-ra-post317340.html