Some products provided by Telvina. Source: Telvina
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Mounting Difficulties
On March 15, 2024, Telecommunication Joint Stock Company Telvina Vietnam (UPCoM: PMT), a subsidiary of Vietnam Posts and Telecommunications Group (VNPT), held its annual shareholders’ meeting at the company’s headquarters in Hanoi.
At the meeting, PMT stated that sales continued to face difficulties due to the economic crisis, leading to weak demand and an oversupply situation. Intense price competition to secure orders for the lowest-priced telecommunications cable products in the last five years has occurred, while input prices have not decreased at the same rate. Some contracts had to reduce prices by 25% to 28% to win bids.
In addition, challenges arise from technical manufacturing requirements that cannot be met. This leads to non-competitive pricing in some new markets. Furthermore, costs such as depreciation, unchanged infrastructure costs, increasing equipment maintenance or replacement expenses add pressure.
The information signal cable market is also facing challenges due to changes in procurement organization. The diversified contractors for construction projects limit PMT’s access. Furthermore, the development and expansion of some cable manufacturers increase competition.
Furthermore, the progress of deploying network investments in traditional markets such as FPT and Mobifone is slow and has seen significant decline. These companies almost did not organize bids or procure new projects, resulting in not releasing previously prepared materials for those projects in time.
As a result, PMT recorded revenue of VND 177 billion, with the majority coming from the VNPT market, achieving approximately 87% of the target set for 2023. Revenue from the SCTV market reached VND 13.5 billion, below the average threshold of VND 15 billion per year. After-tax profit was VND 483 million, also lower than the planned target, achieving 19.3%.
Survival Over Expansion
In 2024, PMT predicts that investments by domestic telecommunications networks and television networks will continue but at a limited pace and scale. The declining demand and abundant supply create fierce competition.
In addition, raw material prices and production costs are increasing due to inflation while selling prices are not increasing, narrowing profit margins. Therefore, the company will continue to maintain operations primarily by surviving instead of expansion to overcome this period.
The company’s leadership is also candid about weaknesses in recent times, such as limited working capital, which reduces the ability to participate in tenders with extended payment periods. Additionally, the quality and technical level of the technical team are not high enough to gain a competitive advantage.
PMT states that it is making efforts to participate in projects with major telecommunications giants Mobifone and Viettel. The company will continue to supply for Mobifone’s transmission infrastructure projects with expectations to achieve a value of VND 8 billion. However, the realization has been low in the past year. As for Viettel, PMT has been invited to bid for multiple fiber optic cable projects but has not won any projects due to the technical barriers mentioned above.
Based on this, the VNPT subsidiary has set a plan for total revenue of VND 186 billion and after-tax profit of VND 2.75 billion this year. The expected return on equity (ROE) is 5.5%. The dividend payout ratio is 5% per share.
Regarding revenue targets, VNPT has proposed to increase the amount to VND 187.5 billion, which has been approved by shareholders.
To achieve these goals, PMT needs to continue participating and winning tenders for the same scope of supply in certain contracts. These contracts will end in 2024 to ensure revenue in the market. PMT also expects to maintain revenue from the Vietnam Railways Group for this year.
As part of its plans, the VNPT subsidiary will continue to research and develop copper and fiber optic cables for smart buildings, invest in the development of automotive and motorcycle electrical cables, invest in the development of CAT6 and CAT7 LAN cables for 5G networks, improve blown optical fiber cables, and develop planar optical fiber cables.
No Compensation for the Board of Directors If There Is a Loss
PMT has already paid the compensation for the board of directors in 2022, totaling VND 54 million, equivalent to VND 18 million per person. The company has not paid the compensation for 2023 yet but has paid VND 5 million per person.
If PMT achieves the planned after-tax profit for this year, the total compensation for the board of directors and the supervisory board will be VND 120 million. If the actual performance exceeds the plan, the compensation will increase by a maximum of 2% for every 1% of after-tax profit exceeded. Conversely, if the actual after-tax profit is 1% lower than the plan, the compensation will decrease by 1% compared to the achievement level of the plan. If there is a loss, the company will not pay any compensation.
As of the end of 2023, apart from VNPT, PMT’s Board Member cum General Director, Mr. Tô Chà Thà nh, holds 3.04% of the company’s capital, while Mr. Thà nh’s wife, Ms. Nguyễn Thúy Hà , owns 17%.
| PMT’s Net Profit from 2007 to Date |
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