HAGL Agrico (HNG) invested 400 million USD to establish a subsidiary despite continuous losses.

Hoang Anh Gia Lai International Agriculture (HNG) establishes a subsidiary in Laos

Recently, the Board of Directors of Hoang Anh Gia Lai International Agriculture Joint Stock Company - HAGL Agrico (Code HNG) announced the establishment of Southern Laos Agricultural Investment and Production Business Company Limited (Southern Laos Agri).

The company's charter capital is approximately 8.3 billion Kip, equivalent to 400 million USD, 100% owned by HAGL Agrico. The company's headquarters is located in Saysettha District, Attapeu Province, Laos. The legal representative is Mr. Tran Bao Son, Director and Member of the Board of Directors.

Losing 10 consecutive rounds, HAGL Agrico invested 400 million USD to establish a company in Lao Cai. Image 1 — Despite consecutive losses, HNG still established a subsidiary in Laos with a capital of 400 million USD (Photo TL)

The newly established company will operate in the fields of agricultural production, hotel services, supply of materials, machinery, equipment, specialized means of transport in agriculture, and transfer of techniques and technology to serve agricultural production investment.

According to HAGL Agrico's third quarter financial report, this unit has two subsidiaries in Laos, namely Hoang Anh - Quang Minh Rubber Industry and Agriculture Company Limited and Hoang Anh Attapeu Agricultural Development Company Limited. Thus, Southern Laos Agri will be the third company of HAGL Agrico established in Laos.

Losses for 10 consecutive quarters, accumulated losses have reached nearly 7,500 billion VND

HNG's business picture over the past 3 years can be summed up in just two words: "loss". Since the second quarter of 2021, HNG has not been able to report a profit in any business period.

The situation of cost of goods sold increasing higher than revenue caused the company to suffer losses right from its main business activities. The loss continuously increased to hundreds of billions of VND each quarter and peaked in the fourth quarter of 2022 with 2,793.4 billion VND.

In the most recent third quarter of 2023, HAGL Agrico recorded net revenue of VND160 billion, down 16% compared to the same period last year. Of which, the fruit tree segment only brought in revenue of VND84 billion, the rubber segment brought in VND55 billion, down 13%. The company recorded a net loss of VND199 billion, marking the 10th consecutive quarter of loss for this unit.

The continued losses have increased the company's total accumulated losses to VND7,449.6 billion. Meanwhile, the owner's equity, recorded at VND11,085.5 billion, is now only VND2,899 billion. Thus, the owner's equity has been almost completely eroded after months of HNG's loss-making business.

Cash balance is only 16.5 billion VND, Mr. Duc completed capital withdrawal

Regarding the asset structure of HAGL Agrico, at the end of the third quarter of 2023, the company's total assets were recorded at VND 14,143.8 billion. Of which, cash and cash equivalents were only VND 16.5 billion. It should be noted that this is an extremely low cash level compared to the asset size of VND 14,143.8 billion of HNG. The company also did not record any significant bank deposits on the financial statements.

Most of HNG's assets are recorded in the form of fixed assets, accounting for VND 5,550.1 billion, and long-term unfinished construction costs accounting for VND 4,272.8 billion.

In the capital structure of the enterprise, payables currently account for 11,244.9 billion VND, equivalent to nearly 80% of total capital. Short-term debt currently accounts for 6,941.3 billion VND, long-term debt accounts for 902.6 billion VND. Thus, the total short-term and long-term debt of HNG is 2.7 times higher than equity, not including other payable obligations.

In another development, in May 2023, HNG shareholders were also surprised when Mr. Doan Nguyen Duc (Bau Duc) withdrew all capital from HNG. At that time, HNG was traded around VND 6,300/share. Currently, in the trading session on December 27, 2023, HNG is only traded at VND 4,280/share.

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