Hang Xanh Auto Service Joint Stock Company (Haxaco - Code: HAX) - the largest distributor of the Mercedes-Benz luxury car brand in the country with a market share of over 38% - continues to have a poor business period in the context of weakened purchasing power.
The "luxury car tycoon" in Vietnam benefited greatly from the strong recovery of the auto consumption market after the pandemic and from the policy of reducing 50% of registration fees, the global chip shortage limited supply. Haxaco had a favorable business year in 2022 with both revenue and profit setting records.
However, the auto retail market has changed dramatically since 2023. Haxaco leaders said that the demand for luxury cars has not improved because people tend to wait for positive signals from the economy, causing car sales to decline compared to the same period.
In the consolidated financial report for the third quarter, this luxury car dealer saw net revenue decrease by 43% compared to the same period last year to VND1,115 billion. Gross profit accordingly decreased by nearly 45% to VND65 billion, corresponding to a slight decrease in gross profit margin to 5.8%.
While operating and financial costs remained the same as the same period last year, after-tax profit dropped rapidly to more than VND8 billion, plunging by more than 85% compared to the same period last year. However, revenue and profit figures were still better than the first two quarters of the year.
Overall, since the beginning of the year, Haxaco recorded a 44% decrease in net revenue to VND2,905 billion (of which the majority of revenue comes from vehicle sales with a proportion of VND2,510 billion, down nearly half compared to the same period of the first 9 months of last year. Profit after tax was less than VND15 billion, down more than 92% compared to the same period.
Total assets are currently at VND1,840 billion, down nearly 30% from the beginning of the year as the company ramped up inventory processing. The value of inventories at the end of this period was about VND583 billion, accounting for nearly 1/3 of total assets but down 45% from the beginning of the year.
At the same time as handling inventory, the company chaired by Mr. Do Tien Dung also sharply cut debt to 520 billion VND, down 55% compared to the beginning of the year.
In a recent report on the auto industry, Dragon Capital Securities (VDSC) said that low lending interest rates are the most important factor (besides increased income) that will influence the decision to buy a Mercedes. Analysts expect that lower lending interest rates will encourage demand for luxury cars in late 2023 and 2024.
In addition, cars are commodities that tend to depreciate rapidly over time (typically, new cars will lose 20% of their value in the first year, then decrease by another 10% each year for the next 4 years), car distributors must optimize their inventory in a weak demand environment.
Source
Comment (0)