South Mekong (VC3) Bao Ninh 2 project accounts for nearly 1,850 billion VND in inventory

Mekong South (VC3) Q2 profit improved

In the second quarter of 2023, Nam Mekong Group recorded net revenue of VND 120.9 billion, a relative increase compared to the second quarter of last year thanks to the recovery of business activities.

Cost of goods sold accounted for 84 billion VND, gross profit reached 36.8 billion VND corresponding to gross profit margin of 30.4%.

Notably, during the period, financial revenue decreased from VND17.3 billion to only VND447.3 million. The reason is that the company no longer records profits from liquidating investments. In addition, interest on deposits and loans also decreased nearly 10 times, from VND4.4 billion to only VND447 million, affecting the company's revenue.

Nam Mekong (VC3) negative business cash flow, 80% of inventory is located at Bao Ninh 2 project (Photo TL)

In the second quarter, investment activities in joint ventures and associates also recorded a loss of VND34 million. Sales expenses accounted for only VND180 million while business management expenses accounted for VND8.8 billion, an increase of VND600 million compared to the same period last year.

In the second quarter of 2023, Nam Mekong recorded a profit after tax of VND 15.8 billion, accumulated profit in the first 6 months of the year reached VND 24.9 billion, an improvement compared to the first 6 months of 2022.

However, although business results have improved, VC3's asset structure still has some issues that investors need to pay attention to.

Cash flow decreased nearly 8.5 times, nearly 80% of inventory is located at Bao Ninh 2 project

By the end of the second quarter of 2023, VC3's total assets reached VND 3,621.9 billion, a slight decrease compared to the beginning of the year. Notably, cash resources decreased from VND 49.3 billion to only VND 5.8 billion, equivalent to an 8.5-fold decrease.

Cash equivalents recorded by VC3 increased 4 times, from 83 billion to 321.9 billion VND. However, in reality, this is a term deposit of less than 3 months at the bank. This caused the amount of deposit interest recorded in VC3's business results report to decrease.

In addition, the company's inventory is currently recorded at VND2,340 billion, a slight decrease compared to the beginning of the year. In the inventory structure, the majority comes from unfinished production and business costs at projects.

It is especially important to note that the largest inventory is located at Bao Ninh 2 Urban Area Project. The inventory of this project is recorded at VND 1,847.7 billion, equivalent to nearly 80% of the total inventory that VC3 is holding.

High debt structure, negative business cash flow, where will Nam Mekong get money to do Bao Ninh 2 project?

As of the end of the second quarter, most of Nam Mekong's capital was debt. Of which, payables accounted for VND2,397.9 billion, equivalent to about 66.2% of the total capital used by the enterprise. Equity accounted for only 33.8%. Thus, 2/3 of Nam Mekong's capital was debt.

VC3's debt structure is mostly short-term debt, accounting for VND2,336.9 billion. Short-term loans and financial leases in the second quarter recorded a sharp increase, from VND120.4 billion to VND293.6 billion. This means that Nam Mekong has increased its debt by 2.4 times in just the first 6 months of the year.

On the contrary, long-term debt decreased from 123.5 billion to only 43.4 billion VND.

Another notable point is that according to the consolidated cash flow statement, VC3's cash flow from operating activities in the second quarter was negative VND35.2 billion, although it decreased compared to the same period last year, it also shows a big problem in the company's business operations.

Source: https://www.congluan.vn/vay-no-tang-24-lan-nam-me-kong-vc3-ton-kho-gan-80-o-du-an-bao-ninh-2-post263464.html