Enterprise

The Road to Recovery: Can Tasco’s Net Profit Rebound Despite the Tasco Auto Merger?

The second-quarter net profit of Tasco Joint Stock Company (HNX: HUT) stood at VND 4.7 billion, just half of the same period last year before the merger with its subsidiary, Tasco Auto Joint Stock Company.

Administrator

5 August, 2024

It comes as no surprise that HUT‘s Q2 revenue surged to 20 times that of Q2/2023, reaching over VND 6.4 trillion. This significant growth is mainly attributed to the additional VND 5.3 trillion contributed by the company’s automobile business segment, which was not recognized in the previous year. The traditional toll collection business, on the other hand, brought in VND 322 billion, a 17% increase.

When compared to the consolidated figures of Q1/2024, Q2 revenue increased by 24%, thanks not only to automobile sales but also to the service segment’s remarkable performance of VND 775 billion, a 60-fold increase from Q1. Similarly, other financial activities tripled, generating VND 346 billion in revenue. Administrative expenses amounted to VND 423 billion, more than doubling.

Changes in HUT’s revenue and expenses since the merger with Tasco Auto (in VND billion)

Source: Author’s compilation

Revenue and expense changes of SVC, a subsidiary of Tasco Auto (in VND billion)

Source: Author’s compilation

HUT benefited from other income of VND 16 billion, which helped boost its after-tax profit by sixfold to over VND 60 billion. However, only VND 4.7 billion was attributable to the parent company’s shareholders, a 50% decrease and the lowest since the merger. In Q1, the company posted an after-tax profit of over VND 26 billion.

For the first six months, revenue reached VND 11.6 trillion, achieving 50% of the full-year plan. Meanwhile, net profit stood at VND 31 billion, completing only 14% of the annual target.

Source: VietstockFinance

As of the end of June 2024, HUT‘s total assets were approximately VND 27.2 trillion, remaining relatively unchanged from the beginning of the year. Over half of the short-term assets, amounting to VND 6 trillion, comprised receivables. The company holds highly liquid assets, including cash, cash equivalents, and investments held to maturity, totaling VND 2.1 trillion or 20% of the total.

Notably, other short-term receivables increased by nearly VND 1 trillion to VND 4.2 trillion, mainly from third parties, but specific details were not provided.

As of the end of the period, the company’s total liabilities exceeded VND 15.6 trillion, with short-term and long-term borrowings accounting for half of this amount, at VND 3 trillion and VND 5.6 trillion, respectively, showing a slight decrease. Other payables, including short-term and long-term portions, amounted to VND 2.7 trillion and VND 1.6 trillion, respectively.

Looking ahead, HUT‘s management believes that the challenges faced by the automotive industry are temporary, and there is significant long-term potential. As a result, the company intends to prepare resources to invest in expanding its scale, increasing the number of showrooms, and introducing new automobile brands to meet future demand.

HUT will continue to develop its non-stop toll collection service, payment intermediary, and VETC e-wallet to offer transportation solutions for cashless fuel payments, financial overdrafts, airport fees, parking, and more. The company will also focus on expanding its used-car trading platform, Carpla.

Last year, shareholders approved the transfer of a portion or all of the shares from the shareholders listed in the share swap list with CTCP SVC Holdings (now Tasco Auto) to CTCP VII Holding, a company chaired by Vu Dinh Do, without the need for a public offering. This transaction could potentially result in VII Holding owning more than 25% of the voting shares in HUT. However, according to the semi-annual governance report for the first half of 2024, VII Holding has not yet taken any action regarding this matter, and its ownership in HUT remained at 0% as of the end of June.