Tasco (HUT) has only completed 4% of its annual target despite revenue increasing 4 times.

Tasco merges with SVC Holdings, revenue increases 4 times, profit drops 74%

Recently, the Hanoi Stock Exchange (HNX) announced the private issuance of 543.88 million HUT shares to exchange for shares for SVC Holdings shareholders. These privately issued shares will be restricted from transfer for 1 year.

The issuance of shares in exchange for shares to SVC Holdings shareholders is expected to significantly dilute the shares of existing shareholders. At the same time, it will cause some major changes in the asset scale and business results of Tasco after merging SVC Holdings.

Tasco's new powdered bee completed 4 goals in 2018, revenue increased 4 times, picture 1 — Tasco (HUT) merged with SVC Hodlings, revenue increased 4 times, profit decreased 74% (Photo TL)

According to the Q3/2023 business results report, Tasco achieved revenue of VND 2,556 billion due to the consolidation of SVC Holdings from September 15, 2023. Gross profit was VND 270.8 billion, more than double compared to the same period. However, gross profit margin also decreased sharply from 40% to 10.6%.

According to Tasco's explanation, after the consolidation, the costs incurred during the period increased sharply, including: Financial costs increased by 54% to 118.2 billion VND; sales costs increased by 1,735% to 91.5 billion VND; business management costs increased by 46% to 95.9 billion VND.

The increased costs caused Tasco's net operating profit to drop by 69%, to only VND6.2 billion. However, HUT's total after-tax profit reached VND12.2 billion, up 28% over the same period.

Tasco's accumulated revenue for the first 9 months reached VND3,180.4 billion, 4 times higher than the same period last year. Profit after tax reached VND29.3 billion, down 74%. Compared to the target set for 2023 with a profit after tax of VND600 billion, Tasco has only completed 4% of the set target.

With diversified investments, Tasco's asset size continues to expand.

In his speech, former Tasco Chairman Ho Viet Ha shared the reason for investing in SVC Holdings, which is the investment orientation in the automobile distribution and real estate sectors. Currently, SVC Holdings owns Savico, a chain of automobile distribution dealers holding 11.2% market share in Vietnam.

Tasco's multi-sector investment strategy is also demonstrated through the acquisition of Groupama Vietnam and then renamed Tasco Insurance for VND402 billion. Tasco also plans to invest an additional VND612 billion in this company.

Continuously carrying out acquisitions, Tasco's asset scale has also continuously expanded. By the end of the third quarter of 2023, Tasco's total assets reached VND 25,089.4 billion, more than double compared to the beginning of the year.

Most financial indicators increased significantly after the merger of SVC Holdings. In particular, short-term receivables more than doubled, accounting for 3,490.3 billion VND. Inventories increased nearly 30 times, to 2,948.1 billion VND.

Regarding capital structure, Tasco's short-term debt increased 3 times, accounting for 6,614.6 billion VND. Notably, the amount of short-term debt increased from 280.3 billion VND at the beginning of the year to 3,115.6 billion VND. Long-term debt also increased from 4,553.8 billion VND to 5,186.7 billion VND.

Equity increased from VND 3,873.5 billion to VND 11,222 billion. Currently, Tasco's equity surplus is temporarily recorded as negative VND 852.8 billion. Undistributed profit after tax is VND 215.3 billion at the end of the third quarter of 2023.

Source