As a credit risk manager, it is important to look beyond headline figures and evaluate the sustainability and quality of a company’s financial performance. PLASTIC CHEMICALS GROUP JOINT STOCK COMPANY (PLASCHEM GROUP), operating in Vietnam’s plastics manufacturing industry since 1999, presents a mixed financial profile—rapid growth on the surface but signs of volatility and potential risk beneath.

The company, led by Mr. BUI TO MINH, who also holds an overwhelming 98.46% ownership stake, reported USD 290.4 million in total assets at the end of 2023, reflecting a healthy 24.49% YoY growth. Sales rose sharply by 47.61%to USD 192.66 million, suggesting expanding operations and strong market demand. Owner’s equity also grew substantially to USD 174.11 million, a 37.08% increase, driven likely by reinvested earnings or capital injection.

However, the profitability profile is weak and concerning from a credit risk standpoint. While there was a significant jump in net profit—from USD 251,534 in 2022 to USD 859,632 in 2023 (a growth of 241.76%)—this only partially recovers from the company’s historical lows. In fact, profit remains well below earlier performance levels in 2021 (USD 2.48 million), and margins are razor-thin when compared to revenue. For a company with nearly USD 193 million in sales, a net profit under USD 1 million points to inefficiencies or unsustainable cost structures.

Moreover, working capital stands at only USD 6.64 million, or less than 3.5% of total assets. This is a red flag, suggesting possible liquidity stress and low short-term financial buffer in the event of revenue disruptions, material cost hikes, or debt servicing needs. Given the nature of manufacturing, which is typically capital- and inventory-intensive, this low level of working capital raises concerns about operational resilience.

Another structural weakness is the high ownership concentration, with Mr. Bui To Minh controlling almost the entire company. While this may streamline decision-making, it also introduces governance risks, especially for creditors and minority stakeholders who have limited oversight or recourse in the event of financial mismanagement.

From a risk management perspective, PLASCHEM’s aggressive top-line growth is encouraging, but the fragile profit margins, low liquidity, and governance concentration suggest that caution is warranted. The company would benefit from improved financial transparency, better cost controls, and a stronger capital buffer to reduce potential default risk.

This critical analysis is based on the verified financial data provided by VANGUARD BUSINESS INFORMATION LLC (VBI), which offers company credit reports, due diligence services, and risk insights on businesses across Vietnam. For more in-depth evaluations, visit https://www.vnbis.com.