Vinafood II falls short of 2,900 billion VND in assets

Reducing short-term debts and settling payable and receivable accounts in the year 2023 has led to a decrease of over 2,900 billion VND in Vinafood II's total assets.

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  • Vinafood II’s total assets decreased by over 1/3, equivalent to a decrease of over 2,900 billion VND in 2023.
  • The company still has accumulated losses of nearly 2,800 billion VND – mostly due to a huge loss in 2018 after “financial manipulation” for equitization.
  • In 2023, Vinafood II’s after-tax profit was 63 billion VND, triple the result of 2022.

In 2023, the total assets of Southern Food Corporation – Joint Stock Company (Vinafood II – UPCoM: VSF) “decreased” by one third, equivalent to a decrease of over 2,900 billion VND. The company has arranged and paid off its debts, receivables, etc., helping its assets become “leaner” after one year.

“Streamlining” assets – resolving financial obligations

In 2023, Vinafood II has paid off over 1,160 billion VND in loans. The company’s outstanding loans have decreased from 2,560 billion VND to nearly 1,400 billion VND after one year.

In addition, the company has also settled a series of payment obligations with related parties, with a value of hundreds of billions, thousands of billions of VND.

In the period from 1993 to 1996, when Vinafood II was still a state-owned enterprise, the company acted as an intermediary for Vietnam’s rice aid to Cuba worth 25.6 million USD – equivalent to 608 billion VND at the end of 2022.

According to the records, this is the amount that Vinafood II has to collect from Cuba, but at the same time, it is also the amount that the company has to pay to the Vietnamese Government at the same time.

In 2023, this receivable – payable has been simultaneously eliminated from the company’s balance sheet, helping to reduce the value of assets accordingly.

Furthermore, at the end of 2022, Vinafood II also had an account receivable with a company in Bangladesh amounting to 1,332 billion VND, and an account payable with a company in Singapore with an equivalent value.

In 2023, these two receivables – payables were also simultaneously eliminated from Vinafood II’s balance sheet – reducing the value of the company’s assets accordingly.

Thus, thanks to the payment of outstanding loans and the settlement of financial obligations, the total value of Vinafood II’s assets has decreased by over 2,900 billion VND.

The scale of Vinafood II’s Total assets and Liabilities (unit: billion VND) both decreased significantly in 2023.

A decrease in assets by billions of VND is a noteworthy signal at a company. However, with Vinafood II, reducing assets is a process of restructuring the company, settling financial obligations, helping assets become leaner, and reflecting the company’s financial situation more accurately.

Accumulated losses of nearly 2,800 billion VND – the stock is still trading at a high price

As of the end of 2023, Vinafood II still has accumulated losses of 2,778 billion VND. This is the result after a long period of losses since the company was equitized in 2018. Vinafood II has only made a profit in the past two years (2022 – 2023) with a very thin profit compared to the scale of its charter capital of 5,000 billion VND or the company’s billion-dollar revenue.

Profit after tax (billion VND) of Vinafood II from 2018, when the company started equitization.

The largest loss of the company in 2018 (nearly 1,500 billion VND) is the result of the process of handling financial issues for previous losses, helping the company equitize and register for trading on UPCoM.

In 2018, Vinafood II provisioned nearly 1,300 billion VND for difficult-to-collect debts from related parties, of which more than half were assets manipulation of the subsidiary – Tra Vinh Food Company. The violations at Tra Vinh Food Company have been addressed and a court decision has been enforced since the beginning of 2023, while the entire missing inventory (physical inventory compared to the recorded quantity) has been fully provided for by Vinafood II since 2018 when the violations were discovered.

Since equitization in 2018, despite achieving annual revenues of over 16,000 billion VND, Vinafood II has continued to incur losses or achieve thin profits due to low profit margins, the characteristic of the rice export industry.

Despite the losses, Vinafood II’s VSF shares are still being traded at around 38,000 VND per share after a “shocking” increase in six months from below par value.

VSF shares began to increase “shockingly” from July 2023 (source: Tradingview)

The company currently owns 4 plots of land in Ho Chi Minh City, including two plots with an area of tens of thousands of square meters in District 8 and District 6. The value of these 4 plots of land is recorded at historical cost, approved since 2017, totaling 561 billion VND.

The value of land use rights and land use plan can change in the future, when there is an official opinion from the People’s Committee of Ho Chi Minh City – Vinafood II’s financial report states.

Currently, besides the State’s capital contribution of 51.43%, Vinafood II also has a strategic shareholder which is T&T Group of Chairman Do Quang Hien (Chairman Hien) with a 25% ownership. Chairman Hien has spent over 1,200 billion VND to become a strategic shareholder of Vinafood II since the company’s IPO in 2018. Based on the market price, Chairman Hien’s investment is valued at 4,750 billion VND.

Vinafood II has just announced its consolidated financial report for Q4/2023 with a Q4 profit after tax of 31 billion VND, doubling the same period 2022. Accumulated for the whole year 2023, Vinafood II made a profit of 63 billion VND, triple the result of 2022.

As a leading company in rice exports, Vinafood II has effectively utilized market advantages in the past year, achieving billion-dollar revenue. However, rice exports are a business field with thin profit margins, and the company’s achieved profits only reached tens of billions of VND throughout the year.

SOURCEcafef
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