Borrowed 5,833 taels of gold from the beginning of 2009, interest 10.8%/year
APT shares of Saigon Seafood Trading Corporation have suddenly resumed trading after a long period of inactivity. Meanwhile, the company has been in a state of loss for a decade.
In the 4 weeks of December 2023, APT recorded 1 session with modest trading each week but the price always hit the floor, bringing this stock from the previous level of 3,800 VND/share to 1,900 VND/share.
APT shares fell sharply in the context of a sharp increase in domestic gold prices, with SJC gold bar prices on December 26 reaching a record high: VND80.3 million/tael (selling price).
APT currently owes Sacombank (formerly Southern Commercial Joint Stock Bank, later merged into Sacombank) 5,833 taels of gold under a contract from 2009, and is now almost unable to pay.
According to the financial report by the end of 2022, APT still had short-term loans of more than VND 504 billion, including VND 103 billion in cash loans with a term of 12 months according to the contract in January 2009 with an interest rate of 12%/year. However, the company has not been able to repay the debt and it still exists until now.
Another debt is 5,833 taels of SJC gold with an interest rate of 10.8%/year according to the contract with a term of 12 months. Up to now, the company has not been able to repay the debt.
In early 2009, the price of gold was about 18 million VND/tael, converted into cash worth more than 100 billion VND. By the end of 2020, the value of 5,833 taels of gold had been adjusted by the bank to more than 249 billion VND (equivalent to about 42.7 million VND/tael).
By the end of 2022, the value of the gold lot that APT owed had increased to more than 401.3 billion VND (about 68.8 million VND/tael). And if calculated based on the peak price of 80.3 million VND at the end of 2023, the debt from the gold lot that APT borrowed had escalated to over 468 billion VND.
Thus, Saigon Seafood not only has to pay interest but also records a rapid increase in principal debt due to the high domestic gold price.
In 2022, APT's interest expense to the bank alone amounted to VND55.7 billion, not to mention the loss due to exchange rate differences.
By the end of 2022, the amount of unpaid interest was nearly 729 billion VND, of which gold loan interest was 570 billion VND.
Businesses plummet because of gold, banks also suffer
Saigon Seafood has two major shareholders: Saigon Trading Corporation - Satra (owns 30%) and Somo Vietnam Group Corporation (41.09%).
APT Chairman is Mr. Nguyen Lam Vinh Huy, who used to be Deputy General Director of SouthernBank. In 2009, when APT borrowed from SouthernBank, Mr. Tran Phat Minh was Deputy General Director of SouthernBank. Mr. Minh was later elected Chairman of ATP.
APT's health condition is dire. This company has been continuously losing money since 2012. The year with the smallest loss is more than 31 billion VND, the rest have lost more than 100 billion VND. In 2020 alone, APT lost more than 206 billion VND. By the end of 2022, APT's accumulated loss will be 1,218.6 billion VND, nearly 14 times higher than the company's charter capital.
Total assets of Saigon Seafood are only over 161 billion VND, but total liabilities are up to over 1,290 billion VND.
By the end of 2022, short-term debts exceeded VND 1,287 billion, much larger than short-term assets (only over VND 89 billion).
The business also has little value left when its equity is negative by nearly VND 1,129 billion, equivalent to negative VND 128,300 per share.
Explaining the floor price drop in December 2023, Ms. Do Ngoc Nga - General Director of APT, said that the stock price decreased due to psychological factors in the stock market.
In fact, APT is under huge debt pressure, and the amount of profit it makes is not enough to pay the bank.
According to the audited financial report for 2022, Saigon Seafood recorded a sharp decrease in revenue to more than 250 billion VND, but gross profit from sales and services still reached nearly 45.5 billion VND. Excluding sales expenses of nearly 29 billion and business management expenses of nearly 12 billion, APT still made a profit of several billion VND.
However, the huge financial expense of more than VND 147 billion (of which, interest expense was nearly VND 55.7 billion and exchange rate loss due to revaluation was nearly VND 92 billion) caused APT to lose nearly VND 141 billion in the whole year of 2022.
Currently, APT has many seafood processing, aquaculture and fish sauce bottling factories as well as a freezing factory in Tan Binh district, Ho Chi Minh City.
According to the auditor, APT's situation indicates the existence of a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern. However, the Board of Directors believes that with the support of the owners (Satra and Somo), the bank's approval for the restructuring of the loan and the plan to issue additional shares, the company's situation will improve. This is the reason why the financial statements for the 2022 fiscal year are still prepared based on the going concern assumption.
In fact, not only businesses but also many banks are suffering from lending and trading gold. Many banks suffered heavy losses in the years 2012-2015.
In mid-2013, the State Bank stopped mobilizing and lending gold bars to credit institutions. However, by mid-2014, hundreds of thousands of taels of gold were still outstanding, in production and business projects, and could not be paid off. Many of these debts still exist today, such as the case of APT.
It can be seen that the separation of gold from banking operations since mid-2013 has ended the risky gold lending business that lasted for the previous decade.
The gold market no longer has "tsunami" gold prices after the State Bank directly managed it. However, a new problem has recently arisen: low gold supply leading to a large gap between domestic and world gold prices.
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