Why did the third quarter profit of tycoon Dang Thanh Tam's corporation "evaporate" 99%?

Kinh Bac Urban Development Corporation - JSC (stock code: KBC) has just announced its consolidated financial report for the third quarter of 2023.

Specifically, in the last quarter, the company had net revenue of VND247.2 billion, an increase of 21.7% over the same period last year. Accumulated for 9 months, net revenue was nearly VND4,798 billion, 3.7 times higher than the same period in 2022.

Sales expenses in the third quarter were VND7.3 billion, 2.2 times higher than last year. Business management expenses decreased slightly by 5.8%, reaching VND7.3 billion. Most notably, financial expenses dropped sharply from nearly VND141 billion to only VND39 billion.

After deducting expenses, the after-tax profit of tycoon Dang Thanh Tam reached 18.5 billion VND, down 99%. In the third quarter of last year, this company made a huge profit of more than 1,935 billion VND.

The company explained that the profit after tax decreased by more than VND 1,916 billion mainly because during the period, it had not yet handed over land to customers in the Nam Son Hap Linh, Quang Chau and Tan Phu Trung industrial parks, with a total area of ​​50 hectares signed. The total value of signed contracts is up to VND 1,700 billion and is expected to be handed over in this fourth quarter.

The financial report shows the profit difference from loss/profit from associated companies. In the third quarter of last year, Kinh Bac earned a profit of nearly VND2,000 billion from this item. Meanwhile, this year, the loss from associated companies was VND2.2 billion.

Kinh Bac's third quarter profit dropped sharply due to no more profit from associated companies (Source: Corporate financial statements).

This extraordinary profit comes from the difference in income between the ownership share in the net assets of the acquired party and the business combination cost, more simply understood as the extraordinary profit due to the difference in valuation of this investment.

Accumulated in the first 9 months of the year, the company's after-tax profit reached nearly VND2,087 billion, down slightly by 2.2% compared to last year.

The company's net cash flow from operating activities in the first nine months reached nearly VND2,402 billion. In the same period last year, this item was negative VND936.2 billion.

Strong cash flow has led to businesses actively repaying loans. Specifically, Kinh Bac spent more than VND4,260 billion to repay loan principal. Net cash flow from financial activities in the first 9 months was negative VND3,401.8 billion, compared to VND200.6 billion in the same period last year.

Comparing the balance sheet, it can be seen that the short-term borrowing of the enterprise as of September 30 was at 570.8 billion VND, only 1/7 compared to the beginning of the year. Previously, in the second quarter, this item was recorded at 904 billion VND.

Other short-term payables were nearly VND3,095.3 billion, down nearly VND734.5 billion. Long-term loans also recorded VND3,296.5 billion, down nearly VND391 billion.

As of September 30, the total assets of the enterprise reached over VND33,747.1 billion, down over VND1,159 billion compared to the beginning of the year. Inventories were at VND12,257.9 billion, accounting for the largest proportion with over 36% of total assets. Trang Cat Urban Area and Industrial Park still accounted for the largest proportion with over VND8,098 billion; followed by Tan Phu Trung Industrial Park, Phuc Ninh Urban Area, Nam Son Hap Linh Industrial Park.

Source: https://dantri.com.vn/bat-dong-san/vi-dau-loi-nhuan-quy-iii-tap-doan-cua-dai-gia-dang-thanh-tam-boc-hoi-99-20231031115820355.htm