Moc Chau Milk increases borrowing in the context of business decline, why?

Moc Chau Milk was originally a state-owned enterprise, established in 1958 under the name Moc Chau Military Farm. By 2016, the company had been fully equitized.

Moc Chau Milk's Q3/2024 profit plummets

Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk; HoSE: MCM) has just announced its financial report for the third quarter of 2024. Accordingly, in the third quarter of 2024, Moc Chau Milk recorded revenue of VND 739 billion, down 9% over the same period last year. In addition, the company's financial revenue also decreased from VND 42 billion in the third quarter of 2023 to VND 23 billion in the third quarter of 2024; equivalent to a decrease of 45%.

On the contrary, the company's financial expenses recorded an increase of 568 million VND, 3 times higher than the same period last year.

After deducting expenses, Moc Chau Milk reported a profit of VND42.6 billion in the third quarter of 2024, down 55% compared to the same period last year. This is also the third consecutive quarter this year that the company has recorded a decline in business.

Accumulated in the first 9 months of 2024, Moc Chau Milk's revenue reached 2,174 billion VND, profit after tax reached 149 billion VND, down 7% and 48.5% respectively compared to the same period last year.

Previously, in the first 6 months of 2024, Moc Chau Milk also only brought in 1,434 billion VND in net revenue, down 5.9% over the same period. Along with that, after-tax profit also dropped by 45.2%, to 106.2 billion VND.

In 2024, the company targets net revenue of more than VND 3,367 billion and after-tax profit of VND 332 billion. Thus, at the end of the first 9 months of the year, Moc Chau Milk completed 64% of the revenue plan and 45% of the profit target set for the whole year.

Just a few months after listing on HoSE, Moc Chau Milk's (MCM) profit has decreased by 55% (Photo TL).

Explaining the main reason for the decrease in after-tax profit in the third quarter of 2024 compared to the same period, Moc Chau Milk said that it was due to a decrease in sales and service revenue compared to the same period, a sharp decrease in financial revenue compared to the same period, and a decrease in deposit interest rates compared to the third quarter of 2023. After 9 months, both Moc Chau Milk's revenue and profit have decreased.

MCM shares fall sharply after asset transfer

Moc Chau Milk's MCM shares will be officially listed on the Ho Chi Minh City Stock Exchange (HoSE) from the end of June 2024. Based on the closing price of MCM shares on October 18, which was VND36,650/share, Moc Chau Milk's market capitalization is estimated at VND4,026 billion.

Moc Chau Milk was originally a state-owned enterprise, established in 1958 under the name Moc Chau Military Farm. By 2016, the company had been fully equitized. Of which, 51% of the charter capital was owned by Vietnam Livestock Corporation (Vilico, stock code VLC). Meanwhile, GTNFoods holds 74.5% of the charter capital at Vilico.

In December 2019, Vietnam Dairy Products Joint Stock Company ( Vinamilk , stock code VNM) increased its ownership ratio at GTNFoods from 43% to 75%. Thereby, Moc Chau Milk became a member unit of Vinamilk.

Currently, Moc Chau Milk has two major shareholders, Vilico with 59.3% ownership and Vinamilk with 8.85% ownership. Ms. Mai Kieu Lien - General Director and member of the Board of Directors (BOD) of Vinamilk is holding the position of Chairwoman of the Board of Directors of Moc Chau Milk.

Faced with unfavorable business results in the third quarter of 2024, Moc Chau Milk's MCM shares have had consecutive price declines.

On the balance sheet, Moc Chau Milk's total assets as of the end of the third quarter of 2024 reached VND 2,716 billion, up 4% compared to the beginning of the year. Of which, investments held to maturity were worth VND 1,638 billion, up 13.6%; short-term receivables decreased by 18% to VND 285 billion; inventories increased by 4.6% to VND 194 billion.

Regarding capital sources, payables as of September 30, 2024 reached VND 364.5 billion, up 33% compared to the beginning of the year. Of which, the majority were short-term payables to suppliers, reaching VND 129 billion, up 5%.

The company's short-term loans reached VND95 billion, while they were not recorded at the beginning of the year. These are short-term loans with a term of 6 months and a stable interest rate, without collateral. The above loans are also the reason why the company incurred additional interest expenses while they were not recorded at the same period.

Notably, the company began recording the first loans at the end of the second quarter of 2024, June 30, 2024, with an amount of VND 20.8 billion.

Faced with unfavorable business results in the third quarter of 2024, Moc Chau Milk's MCM shares have had consecutive price declines. At the trading session on October 18, 2024, MCM code was only at VND 36,650/share, equivalent to a loss of more than 14% compared to the reference price at the time of listing (reference price VND 42,800/share).

Notably, the unit's long-term assets, mainly fixed assets, used to be worth VND1,148.9 billion but have now been almost fully depreciated, leaving only VND372.7 billion. Equivalent to 67% of the asset value has been depreciated.

Source: https://danviet.vn/moc-chau-milk-tang-vay-von-trong-boi-canh-kinh-doanh-sa-sut-vi-sao-2024102015501771.htm