International Dairy Products Joint Stock Company (IDP) is short of cash and must issue shares to pay off debt.
International Dairy Products Joint Stock Company (IDP) has just announced the documents of the annual general meeting of shareholders with many noteworthy information for shareholders. The most notable of which is the business plan for 2022 with a target of net revenue of VND 7,141 billion, an increase of 17% compared to 2022. However, the planned profit after tax decreased by 4% to only VND 776 billion.
In addition, IDP International Milk also submitted to shareholders for approval a plan to offer 2.4 million individual shares. This share offering will have a price not lower than the average reference price of 20 consecutive trading days before the date the Board of Directors approves the offering price. And at the same time, the price will not be lower than the book value as of December 31, 2022, which is VND 30,615/share.
International Dairy Products (IDP) plans to issue shares, the capital of nearly 500 billion will be used to pay debts and buy raw materials (Photo TL)
If the reference date is March 24, 2023, the average reference price of the previous 20 consecutive trading days of IDP is 195,785 VND/share. Based on this price, the total expected revenue will be about 470.9 VND. The company plans to use 230 billion VND to buy raw materials for production and business activities. Use 100 billion VND to repay loans to the Vietnam Joint Stock Commercial Bank for Investment and Development - BIDV. Repay loans to the Vietnam Joint Stock Commercial Bank for Industry and Trade - Vietinbank. Finally, 40.9 billion VND will be used to pay marketing costs.
With the above capital usage goals, it can be seen that the purpose of purchasing raw materials and paying marketing expenses are both daily production and business activities. The remaining two expenses are to pay due debts. Thus, it can be seen that International Milk is seriously lacking in cash for both production and business activities and paying due debts.
Revenue increased but cost pressure was high, short-term debt increased by hundreds of billions of dong
The difficulties of IDP International Milk can be easily recognized through the business results report of this unit. In 2022, net revenue from sales and service provision reached 6,086.5 billion VND, an increase of 26.1% compared to 2021. The high cost of goods sold and the simultaneous increase in expenses caused the company's after-tax profit not only not to increase but also to decrease slightly to only 810.5 billion VND.
Expenses recorded during the period include: Financial expenses increased from VND 27.5 billion to VND 57.3 billion, nearly doubled, mainly due to interest expenses. Sales expenses also increased from VND 989.2 billion to VND 1,281.9 billion, an increase of 29.6%. Business management expenses increased from VND 102.6 billion to VND 134.3 billion, an increase of 30.9%.
Revenue growth but no cost reduction has caused International Milk's profits to be largely eroded.
By the end of 2022, IDP International Milk's total assets increased relatively strongly, to VND 3,840.1 billion. Of which, equity accounted for about VND 1,807.2 billion, and liabilities accounted for VND 2,033 billion. Notably, International Milk's short-term debt increased from VND 1,645.2 billion to VND 1,984.4 billion, equivalent to an increase of more than VND 300 billion in short-term debt in just 1 year.
Although cash flow in 2022 recorded a positive net cash flow from operating activities of VND 628.4 billion, it was less than VND 746.1 billion last year. Net cash flow from investing activities was only negative at about VND 489.7 billion. With such positive figures, International Milk's cash flow should have been extremely healthy, enough to serve daily business activities. This makes us wonder about the decision to issue shares to raise money to pay debts and buy raw materials as the resolution submitted to the upcoming General Meeting of Shareholders of IDP International Milk.
Source
Comment (0)