QCG of businessman Cuong "Do La" lost 16.6 billion VND, cash flow is difficult to turn around

Quoc Cuong Gia Lai (QCG) lost 16.6 billion VND in the first half of the year.

Quoc Cuong Gia Lai Joint Stock Company (Code: QCG) is being operated under the direction of General Director and legal representative, Mr. Nguyen Quoc Cuong, a businessman also known to investors as Cuong "Do La". According to the semi-annual financial report, QCG is recording a significant decrease in revenue, along with a large loss due to still having to bear operating costs despite ineffective business.

Specifically, net revenue reached 65.2 billion VND, down 3.2 times compared to the same period last year. High cost of goods sold caused gross profit to be only 70.5 million VND.

Quoc Cuong Gia Lai of businessman Cuong "Do La" lost another 16.6 billion VND, cash flow is difficult to turn around (Photo TL)

The financial revenue surge from 611 million to 6.4 billion VND has shouldered a significant portion of financial expenses. However, the majority of that is profit from the sale of investments.

On the contrary, financial expenses accounted for 17.5 billion VND, mostly interest expenses, which is putting great pressure on the company, especially in the context of QCG's sharp decline in revenue and stagnant business activities as it is now.

Despite the sharp decline in revenue, QCG is still having to bear additional selling expenses of VND321 million. Business management expenses decreased by half compared to the same period, recorded at VND6.9 billion. Of which, employee expenses accounted for VND2.8 billion, only slightly down compared to the same period.

As a result, after deducting expenses and taxes, QCG recorded a loss of VND16.6 billion after tax, up 21.1% over the same period. The parent company's shareholders alone lost VND15.1 billion, up 11%.

Real estate is gloomy, rubber is not promising, where does QCG get money to pay 2,882 billion?

Explaining the poor business performance in the first half of the year, QCG said that the real estate market still faced many difficulties. On the other hand, the first 6 months of the year were the dry season, leading to the company's hydroelectric plants not having enough water to generate electricity, so the exploited electricity output was still low.

Rubber operations have not yet brought in much revenue while depreciation costs and bank interest still have to be paid, leading to a high cost of capital compared to revenue, causing losses.

Another notable development, in the case involving Ms. Truong My Lan, on April 11, 2024, the People's Court of Ho Chi Minh City issued a first-instance judgment No. 157/2024/HS-ST ordering QCG to return VND 2,882.8 billion to Sunny Island Investment JSC. In return, QCG will receive all real estate and related documents.

Before the above information, QCG shares had strong price increases because investors expected that receiving real estate from the transaction reversal would bring profits to QCG. However, the question is, with the current business situation, where will QCG find the money to pay 2,882.8 billion VND according to the court's decision?

Recently, Quoc Cuong Gia Lai had to file an appeal to the People's Court of Ho Chi Minh City with the content of the protest requesting approval of only the amount of 1,441.1 billion VND to ensure the amount of execution of the judgment according to the spirit of the VIAC arbitration court's decision.

75% of assets are inventories, mainly related to Phuoc Kien Residential Area

At the end of the second quarter of 2024, QCG recorded total assets of VND 9,375.9 billion, a slight decrease compared to the beginning of the year. The company's cash balance remained at only VND 27.6 billion, relatively low compared to the asset size of nearly ten thousand billion.

Inventory currently accounts for the highest proportion of total assets at VND 7,028.5 billion. Most of which comes from the Phuoc Kien Residential Area project, the Lavida project and several other projects. Compared to total assets, inventory accounts for 75%.

Regarding capital structure, QCG recorded payables of VND4,886 billion, of which VND4,150.3 billion was recorded as payables to other entities. Specifically, large payables include: Sunny Island Investment JSC accounting for VND2,882.8 billion; Vung Tau Ocean Entertainment JSC VND300 billion; Dividends payable VND194.7 billion; A&B Food and Beverage JSC VND83 billion; Ia Grai Hydropower JSC VND69 billion.

The equity structure accounts for only 4,489.9 billion VND, equivalent to half of the assets. From here, it can be seen that the company is "stagnating" most of its borrowed capital and equity in the Phuoc Kien project and the Lavida project. Meanwhile, the business cash flow recorded a negative 7.7 billion VND, the same period negative 56 billion, making the turnaround more difficult than ever.

Source: https://www.congluan.vn/quoc-cuong-gia-lai-cua-doanh-nhan-cuong-do-la-lo-166-ty-dong-dong-tien-xoay-tro-kho-khan-post310461.html