Declining net profit in Q4, why is the total assets twice as high?

CTCP Tasco (HNX: HUT) has just announced its consolidated financial statements for the fourth quarter of 2023, with net revenue skyrocketing to nearly VND 7.795 trillion, 24.6 times higher than the same period last year. Of which, sales revenue is over VND 7.484 trillion, accounting for 96%.

Financial activities revenue also increased by 63% to VND 284 billion.

Total expenses during the period also surged to VND 767 billion, 3.9 times higher than the same period last year. The majority is selling expenses of VND 288 billion (24.6 times higher) and management expenses of nearly VND 351 billion (3.5 times higher).

Finally, HUT reported a net profit of over VND 19 billion, a 29% decrease.

Source: VietstockFinance

Explaining the results, HUT said that during the period, the Group increased the number of companies significantly after completing the merger. Tasco Auto Co., Ltd. became a subsidiary of Tasco on September 8, 2023, boosting revenue from the automotive business segment.

In late August 2023, HUT completed a private placement to exchange nearly 544 million shares with 21 individual shareholders of SVC Holdings Joint Stock Company (now Tasco Auto). As a result, HUT owns 100% of the capital of SVC Holdings and increases its charter capital from over VND 3.486 trillion to VND 8.925 trillion.

SVC Holdings owns multiple automobile distribution companies, including a 54.1% stake in Saigon General Service Corporation (Savico, HOSE: SVC) – the largest automobile distributor in Vietnam with a 12% market share nationwide.

SVC Holdings officially belongs to Tasco

After the merger, as of the end of 2023, HUT has a total of 69 subsidiaries, including 6 companies directly owned and 63 indirectly owned. The number of associated companies also increased to 13.

Source: HUT

Accumulated for the whole year 2023, HUT recorded net revenue of over VND 10.975 trillion, more than 10 times higher than the same period last year; while net profit is nearly VND 44 billion, a 70% decrease.

Total assets doubled compared to the beginning of the year

With the merger of Tasco Auto into the Company, almost all of HUT’s capital has significantly increased on the balance sheet.

Source: VietstockFinance

Specifically, as of the end of 2023, HUT’s total assets reached VND 26.899 trillion, 2.3 times higher than the beginning of the year. Cash and cash equivalents also increased by 82% to nearly VND 1.738 trillion, with the majority being bank deposits (VND 1.553 trillion).

Short-term accounts receivable from customers increased to nearly VND 1.475 trillion, 3.2 times higher than the beginning of the year, due to sales activities generating more than VND 778 billion.

Source: HUT

Inventory exceeded VND 2.500 trillion, 25.6 times higher than the beginning of the year, of which nearly VND 1.737 trillion is inventory of automobiles and motorcycles, accounting for 70%. In addition, the inventory also includes notable unfinished business production costs such as the Nam Cau Cam Le residential area project with nearly VND 586 billion.

HUT has unfinished basic construction costs of nearly VND 1,871 billion, almost 6 times higher than the beginning of the year, mainly concentrated in the Long Hoa – Can Gio project with more than VND 715 billion; Mercure Son Tra, Da Nang project with nearly VND 497 billion; and the 104 Pho Quang project with more than VND 267 billion.

Source: HUT

On the other side of the balance sheet, HUT’s total payable amount surged to nearly VND 15.647 trillion, twice as much as the beginning of the year. Of which, the total borrowing debt, both short-term and long-term, is more than VND 8.250 trillion, an increase of 71% compared to the beginning of the year, accounting for 53% of the total borrowing debt and 31% of the Company’s capital.

As of December 31, 2023, the total number of employees of HUT increased from 1,100 at the beginning of the year to 6,586, an increase of 5,486 people.

Thanh Tú