Weak finance-backed companies possess large land funds

Saturday, Jan 14, 2023 10:57

Ho Chi Minh City Public Lighting Joint Stock Company (SAPULICO or CHS) operates in the field of management and maintenance of public lighting systems, traffic lights, construction of public works, and other construction systems. — Photo chieusang.com.vn

There are now many enterprises on UPCOM with small charter capital but a great amount of land funds.

With low business performance and low stock market price, the businesses can become the targets of other big companies.

With a charter capital of only VND145 billion (US$6.18 million), Ha Noi Food Joint Stock Company (HAF) holds many real estate assets located in the capital’s central areas, including 11 commercial centres, supermarkets and convenience stores; as well as eight hotels, restaurants, and food service establishments.

Some prominent land areas include 736sq.m at 51 Le Dai Hanh Street; 164.5sq.m at 46 Luong Ngoc Quyen; 347.6sq.m at 7 Dinh Liet; and 200sq.m at 30 Hang Dao.

HAF also has other real estate facilities owned by two subsidiaries – Bac Qua Trading and Service Joint Stock Company – in which HAF holds 54 per cent of the capital, and Lang Yen Trading Joint Stock Company in which HAF holds 51 per cent of capital.

A project of Bac Qua Joint Stock Company is located on an area of 2,296sq.m at the intersection of Hang Khoai – Nguyen Thien Thuat and the project of Lang Yen Company is located at 21 Tran Khanh Du.

Despite owning many desirable pieces of land in the capital, HAF's business activities are inefficient. In the 2016-19 period, the profit of the business declined from VND11.4 billion to VND3.1 billion. Since 2020, HAF has suffered continuous losses.

The financial report of the third quarter of 2022 shows that, in the first nine months of the year, the company's revenue from sales and service provision reached VND81.29 billion, down 27 per cent compared to the same period in 2021; and after-tax loss was VND6.3 billion, a sharp increase compared to the loss of VND3.5 billion in the same period in 2021.

HAF operates in retail, wholesale and management and operation of a network of locations. The COVID-19 pandemic has severely damaged the wholesale business and exploitation of the network of locations for rental. Some clients closed, returned premises, and liquidated contracts ahead of due time. Accordingly, the company's commercial revenue went down and losses increased in 2022.

CHS: Business goes down after equitisation

Ho Chi Minh City Public Lighting Joint Stock Company (SAPULICO or CHS), has a charter capital of VND284 billion, of which Ho Chi Minh City State Financial Investment Company (HFIC) holds 51 per cent, and Long Hau Joint Stock Company holds 34 per cent.

Sapulico was equitised in 2015, operating in the field of management and maintenance of public lighting systems, traffic lights, construction of public works, and other construction systems.

At the time of the IPO, the company managed and used many land lots in HCM City and other provinces. Particularly in HCM City, Sapulico has 386sq.m at 121 Chau Van Liem, 2,372.5sq.m at 167 Luu Huu Phuoc, 318sq.m at 436 An Duong Vuong, 218sq.m at 55 Nguyen Thi; 680.9sq.m at No. 3 TL14, 2500sq.m in Tan Thanh Commune, Cu Chi District.

Before equitisation, in the 2012-14 period, CHS had profit after tax ranging from VND80.3 billion to VND102.3 billion per year. When equitised in 2015, the company's profit after tax in the first nine months reached VND51.5 billion.

However, after equitisation, Sapulico's business results dropped sharply. In 2017, CHS achieved revenue of VND383 billion and profit after tax of VND25.3 billion; in 2018, revenue was VND375 billion and profit after tax was VND23.9 billion; in 2019, revenue reached VND404 billion and profit after tax was VND31.5 billion.

PCM: profit only reaches 5 per cent of the set plan

Post and Telecommunications Construction Material JSC (PCM) has a charter capital of VND40 billion, the state capital accounts for 49 per cent, and is managed by the Vietnam Posts and Telecommunications Group.

The company manages and uses many large land lots such as 9,419.2sq.m at 64 Cau Dien Street in Ha Noi; 11,547.2sq.m in Loc Ha in Dong Anh, 29,218sq.m in Nam Son Ward, in Ninh Binh Province; 63.3sq.m in 57/20 Bau Cat in HCM City; and 5,330.3sq.m in Tam Diep Commune, Ninh Binh Province.

In recent years, the company's business performance has been relatively poor, with dividends all below 2.5 per cent per year. In 2021, it was only 0.19 per cent.

In 2021, the COVID-19 pandemic strongly affected the company's business activities. The company also faced problems such as limited human resources and low efficiency. PCM achieved revenue of VND51.2 billion, profit after tax was only VND75 million in the year. This profit reached only 5 per cent of the plan approved by the annual general meeting of shareholders.

In the first six months of 2022, the company achieved revenue of VND30.37 billion, an increase of 59.8 per cent over the same period in 2021; profit after tax reached VND225.4 million. — VNS

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