After 2 consecutive years of losses, SMC Investment and Trade has to sell land to maintain operations.

SMC Commercial Investment sells land for the third time this year

Recently, on September 23, 2024, the Board of Directors of SMC Investment and Trading Joint Stock Company (HoSE Code: SMC) approved the transfer of land use rights and assets attached to land at SMC Da Nang One Member Co., Ltd. (a subsidiary of SMC).

In which, the land lot for sale is plot number 1, map sheet number 72, road number 2, Hoa Cam industrial park, Hoa Tho Tay ward, Cam Le district, Da Nang city. The purpose of using the above land is industrial park land with an area of ​​27,731 m2, the transfer price is more than 96 billion VND.

SMC Commercial Investment has suffered losses for 2 consecutive years, had to sell land 3 times in 2024 (Photo TL)

This is not the first time SMC has had to sell assets due to business difficulties. Since the beginning of the year, the unit has had to sell land twice to raise money to maintain operations.

Specifically, in early 2024, SMC also approved the transfer of land use rights and assets attached to the land at SMC Tan Tao 2, located at lot 62-64, street 3, Tan Tao Industrial Park, Tan Tao A ward, Binh Tan district, Ho Chi Minh City. This land area has an area of ​​9,096 m2, transfer price of 126 billion VND.

In April 2024, the company decided to transfer the land use rights, house ownership rights and assets attached to the land for the office building that is the company's headquarters at 681 Dien Bien Phu, Ward 25, Binh Thanh District, Ho Chi Minh City. The land area is 329.5 m2 with a transfer value of 170 billion VND.

SMC and 2 consecutive years of business losses

The decisions to sell assets were made continuously in the context of SMC's business losses for two consecutive years, facing the possibility of forced delisting.

Specifically, in 2022, SMC recorded a sharp increase in revenue to VND 23,182 billion. However, contrary to the revenue growth, the company suffered a loss after tax of up to VND 652 billion.

In 2023, SMC's net revenue dropped by nearly half, to VND13,702 billion. The loss after tax also increased to VND925 billion. Owner's equity was therefore eroded from VND1,723 billion to only VND798 billion at the end of the year.

In the first quarter of 2024, SMC made a profit again with 183 billion VND but immediately after that continued to lose another 107 billion VND in the second quarter of 2024.

Notably, in the first 6 months of the year, the unit's financial expenses accounted for 120.7 billion VND, higher than the total sales and business management expenses in the period. This shows that loans are causing great financial pressure on SMC's operations.

Previously, on April 10, SMC shares were put on warning and control due to losses for two consecutive years. In the latest announcement on September 4, 2024, HoSE still decided to maintain the warning status for SMC shares because the company still had accumulated losses of more than VND 68 billion as of June 30, 2024.

Liabilities are 4 times higher than equity

Business is gloomy, SMC's capital structure is also showing many potential risks when debt is many times higher than equity.

At the end of the second quarter of 2024, liabilities accounted for VND 4,329.7 billion, equivalent to 83% of the company's current total capital. This means that liabilities are also 4 times higher than equity.

Of which, the short-term loans and financial leasing debt have decreased compared to the beginning of the year but still account for VND 2,251.4 billion. Long-term loans account for VND 255.8 billion.

Thus, the total long-term and short-term debt accounts for VND2,507.2 billion, 2.8 times higher than equity. In the consolidated financial statements for the first 6 months of the year, equity is recording an undistributed loss after tax of VND68.3 billion.

Source: https://www.congluan.vn/thua-lo-lien-2-nam-dau-tu-thuong-mai-smc-lai-phai-ban-dat-de-duy-tri-hoat-dong-post313792.html