Chuong Duong Sarsaparilla forecasts another loss of 73 billion VND this year

Despite setting a target of strong revenue growth this year, Chuong Duong Sarsaparilla is still expected to lose more than 73 billion VND after tax, thereby extending its loss streak for the fourth consecutive year.

According to documents submitted to the annual general meeting of shareholders, the Board of Directors of Chuong Duong Beverage Joint Stock Company (stock code: SCD) believes that business activities have good growth prospects this year, so it has set a target of net revenue from sales and service provision of VND 225.26 billion, 78.4% higher than last year.

To achieve the target of double-digit revenue growth, the management of Sarsi Chuong Duong said that this year the company will continue to revive and develop old brands, and launch a line of healthy soft drinks. In addition, the company said it will rebuild its business management team, restore and increase sales coverage as well as distribution network in Ho Chi Minh City and neighboring provinces such as Long An, Tay Ninh, Dong Nai, Binh Duong, Ba Ria Vung Tau. To expand distribution and increase production, the management plans to penetrate other potential areas with the goal of having at least one distributor in each province.

“The company will also further optimize cost of goods sold, while minimizing the possibility of increased raw material and packaging prices,” said the company's management.

However, the management also assessed that the strong growth of competitors is a major challenge in the company's efforts to expand its market share. In addition, the cost of outsourcing services is still high, so the profit after tax is expected to continue to be negative. Specifically, the Board of Directors plans to have a loss after tax of VND 73.11 billion this year, extending the loss streak for the fourth consecutive year. With a loss after tax of more than VND 73 billion, the company's undistributed profit by the end of 2024 is expected to be negative VND 275 billion.

Last year, Chuong Duong Sarsaparilla recorded net revenue of VND126.27 billion, a sharp decrease compared to the same period last year and far below the initial plan of VND364.78 billion. The company reported a loss after tax of VND119.25 billion, while the initial plan expected a profit of approximately VND4 billion.

According to the management, the 2023 business results were not as expected due to a decrease in consumption output, leading to a sharp decline in revenue. In addition, the cost of aluminum can packaging materials and sugar increased as well as expenses such as land rent, transportation, consulting services, etc., causing the company to report a heavy loss.

This loss caused the company to be delisted by the Ho Chi Minh City Stock Exchange (HoSE) because "its business results were loss-making for 3 consecutive years or the total accumulated loss exceeded the actual contributed charter capital, or the owner's equity was negative in the most recent audited financial report".

The news of delisting after nearly 18 years of listing on the stock exchange caused the stock price to plummet. Specifically, SCD is experiencing a deep decline for 3 consecutive sessions, including one session hitting the floor. The stock price is currently at 11,600 VND, corresponding to a market capitalization of less than 100 billion VND.

Source