Major Vietnamese companies face auditors' warnings over going concern status

The latest audit reports for these businesses highlight various financial challenges, ranging from massive accumulated losses to mounting short-term liabilities.

TMT Motors grapples with record losses and restructuring

TMT Motors (Code: TMT) was specifically called out by UHY, its auditing firm, which expressed concerns about "material uncertainties that may cast significant doubt on the company’s ability to continue as a going concern." This warning comes on the heels of a record loss of 99 billion VND in the first half of 2024, marking the worst financial performance in the company’s history. This figure starkly contrasts with the nearly 1.2 billion VND profit the company posted in the same period last year.

As of June 30, 2024, TMT Motors' short-term liabilities stood at 1,107 billion VND, exceeding its short-term assets by 120 billion VND. Furthermore, the company owes over 60 billion VND in unpaid taxes.

In response to these challenges, TMT Motors has been forced to implement several drastic measures. These include reducing prices to clear out inventory, cutting staff, and restructuring product lines to focus on new models. The company has also stated that it will liquidate fixed assets and investments, collect outstanding receivables, and secure additional working capital to meet debt obligations.

TMT Motors has also ventured into the electric vehicle market, launching its Wuling HongGuang Mini EV in September 2023. The company aims to sell 5,000 electric vehicles annually, signaling its strategic shift amid financial turmoil.

HAGL struggles to manage debts and losses

Hoang Anh Gia Lai (HAGL) (Code: HAG) continues to face scrutiny from Ernst & Young Vietnam. The audit firm flagged HAGL's accumulated losses of 957 billion VND and noted that the company’s short-term liabilities exceed its short-term assets by 350 billion VND.

As of the end of Q2 2024, HAGL had not repaid 790 billion VND in principal and 8 billion VND in interest due on loans. Additionally, the company has yet to settle bond interest payments amounting to 3,278 billion VND.
 

Despite these difficulties, HAGL’s leadership remains optimistic. The company has developed a business plan for the next 12 months, which includes generating cash flow from liquidating financial investments, selling assets, collecting loans from partners, and securing bank loans. Business activities, particularly from its pig and banana ventures, are expected to generate significant cash flow in 2024.

In the first half of the year, HAGL posted a post-tax profit of 500 billion VND, a 30% increase year-on-year, fulfilling 38% of its annual target. This has enabled the company to reduce its accumulated losses to below 1,000 billion VND.

Hoa Binh Construction faces delisting despite improved profitability

Hoa Binh Construction Group (Code: HBC) has also been flagged for its precarious financial situation, with auditors citing accumulated losses of 2,403 billion VND and several overdue debts.

Despite these warnings, HBC’s business performance has shown signs of improvement. In the first half of 2024, the company’s revenue grew by 6% to 3,600 billion VND. Its net profit jumped significantly to 897 billion VND, a sharp turnaround from previous losses. This improvement was primarily driven by financial income and other profits.

However, the Hanoi Stock Exchange (HOSE) recently announced the mandatory delisting of all 347 million HBC shares, effective September 6, 2024. The delisting is due to the company’s accumulated losses at the end of 2023 exceeding its contributed charter capital. Starting September 10, 2024, the stock will trade on the UPCoM exchange.

Vietnam Airlines faces high debt and negative equity

Vietnam Airlines (Code: HVN) has also come under the auditors’ spotlight. KPMG raised concerns over the company’s ability to continue operating, noting that its short-term liabilities exceed its short-term assets by 40,787 billion VND. Additionally, Vietnam Airlines has overdue payables of 13,351 billion VND and negative equity of 11,633 billion VND.

The airline’s future largely hinges on its ability to negotiate extended payment terms with creditors and suppliers, as well as the success of its restructuring plan, which is currently under review by shareholders and authorities.

Despite these challenges, Vietnam Airlines recorded a net revenue of 53,126 billion VND in the first half of 2024, a 20% year-on-year increase. The company also achieved a post-tax profit of 5,475 billion VND, a significant improvement compared to the 1,386 billion VND loss recorded in the same period last year. However, the airline still faces accumulated losses of over 35,800 billion VND.

Becamex TDC: parent company offers financial support

Binh Duong Trading and Development JSC (Code: TDC) was similarly flagged by auditors for concerns over its ability to continue operating. The company reported accumulated losses of 318 billion VND, and its short-term liabilities exceeded its short-term assets by 1,097 billion VND as of mid-2024.

However, the company’s parent, Becamex, along with other members of the group, has pledged financial support. Becamex has guaranteed loans and has agreed not to demand repayment for goods and services until TDC can meet its obligations.

Despite these financial pressures, Becamex TDC’s revenue in the first half of 2024 remained stable at 235 billion VND. The company reported a net profit of 50 billion VND, a significant improvement compared to a loss of 322 billion VND in the same period last year, completing 12% of its annual target.

To address cash flow issues, Becamex TDC is seeking shareholder approval to issue 35 million private shares to raise 350 billion VND. The proceeds will be used to repurchase bonds before maturity in early 2025.

LDG Investment faces mounting losses amid leadership troubles

LDG Investment JSC (Code: LDG) is facing mounting financial pressure, with auditors from Moore AISC expressing concerns over the company’s ability to continue operating. The company’s future is dependent on its ability to repay, extend, and restructure overdue debts, as well as generate short-term cash flow.

LDG has been facing difficulties since former Chairman Nguyễn Khánh Hưng was arrested in connection with the Tân Thịnh residential project. The company is awaiting further information from authorities and has yet to assess the full impact of the case.

In the first half of 2024, LDG reported a net loss of 396 billion VND, pushing its undistributed profit into negative territory at 278 billion VND. LDG is working with banks to restructure its debts, including a 12-month debt extension from Sacombank. It is also negotiating with bondholders to extend the repayment obligations on a 180 billion VND bond issuance.

Other companies under scrutiny

Other companies facing similar warnings from auditors include Thủ Đức Housing Development (Code: TDH), which has accumulated losses and short-term liabilities exceeding its short-term assets, and Vietnam Electricity Construction Corporation (Code: VNE), which has also reported accumulated losses and negative cash flow from its operations.

These financial challenges highlight the significant struggles many Vietnamese companies face in maintaining their operations amid economic downturns, rising inflation, and growing debt burdens. With auditors issuing warnings, these firms are under pressure to restructure, manage debt, and seek new revenue streams to ensure their survival.

Source: vietnambiz

Compiled by Vietnam Business Information