Vinaconex (VCG) Q1 profit decreased by 98%, had to sell all 44.2% of shares at VCM

Vietnam Construction and Import-Export Corporation - Vinaconex (VCG) fully divests capital from VCM

Vietnam Construction and Import-Export Corporation - Vinaconex (Code VCG) has just registered to sell 1.326 million shares of Vinaconex Human Resources and Trading Corporation (VCM). The transaction was registered from June 21 to July 20.

Currently, VCG owns 44.2% of shares at VCM. If the transaction is successful, VCG's ownership ratio will decrease to 0%.

Vinaconex's divestment move at VCM attracted the attention of many investors because at this time, not only the parent company but also VIMECO JSC, a unit related to Vinaconex's Chairman of the Board of Directors, Mr. Nguyen Khac Hai, also registered to sell all VCM shares it was holding.

lai quy 1 lao doc 98 vinaconex vcg registered to sell all 442 shares at vcm image 1 — Q1 business results with after-tax profit evaporating by 98%, Vinaconex (VCG) had to divest all 44.2% of shares at VCM (Photo TL)

VIMECO currently owns 130,000 VCM shares, equivalent to a 4.33% ownership ratio. VIMECO has registered to sell all of them by order matching or negotiation from June 21 to July 19 to divest all of its capital from VCM.

In the trading session on June 20, VCM shares were traded at a price of about VND29,100/share. Thus, Vinaconex earned an amount equivalent to about VND38.6 billion. VIMECO earned about VND3.8 billion.

Q1 profit plummeted 98%, VCG only completed 2% of 2023 target

With the move to divest all capital from VCM, earning tens of billions of VND in cash, many investors are questioning Vinaconex's business situation. In the first quarter of 2023, the company achieved revenue of about 1,965 billion VND, an increase of about 47% over the same period. Gross profit reached 315 billion VND, nearly double that of the first quarter of 2022.

Financial revenue in the period decreased sharply from VND 737 billion to only VND 93 billion due to no longer recording VND 598 billion in profit from the cheap purchase of a subsidiary in the first quarter of 2022.

Most of the expenses during the period increased, such as financial expenses increased from 193 billion to 218 billion VND, business management expenses increased to 87 billion VND, and sales expenses remained at 15 billion VND.

After deducting all expenses, Vinaconex's after-tax profit in the first quarter was only VND 16 billion, down 98% compared to the same period last year. Compared to the 2023 business plan with revenue of VND 16,340 billion and after-tax profit of VND 860 billion, at the end of the first quarter, Vinaconex had only completed 2% of the set target.

Assets are mainly debt, must issue 49 million shares to pay dividends

At the end of the first quarter of 2023, VCG's total assets were recorded at VND 32,474 billion, an increase of nearly VND 500 billion compared to the beginning of the year. It is worth noting that in VCG's capital structure, liabilities account for a large proportion, up to VND 22,550 billion, equivalent to 69.4% of total assets.

Of which, the company is currently borrowing short-term debt of up to VND 5,416 billion, the short-term debt target increased by VND 61 billion compared to the beginning of the year. Long-term debt also recorded an increase of VND 531 billion, reaching VND 8,699 billion at the end of the first quarter of 2023.

Equity at the end of the first quarter reached VND9,924 billion, with issued equity accounting for VND4,859 billion, and the company's undistributed profit after tax reaching VND1,695 billion.

With the above business situation, Vinaconex has announced the Board of Directors' resolution on the plan to pay dividends in 2022 by shares. Specifically, the company will pay dividends in shares at a rate of 10%. Correspondingly, each shareholder owning 100 VCG shares will receive 10 additional newly issued shares.

To implement this dividend payment plan, Vinaconex plans to issue 48.6 million new shares, increasing its charter capital from VND4,859 billion to VND5,345 billion.

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