Vinh Hoan (VHC) continues to slide with May business results

May revenue continues to fall 37%, continuing 5 consecutive months of negative growth in 2023

Vinh Hoan Corporation (code: VHC) continues to record ineffective business results due to declining export demand in some key markets. In May alone, Vinh Hoan recorded revenue of only VND954 billion, down 37% compared to the same period last year.

Export revenue in many markets plummeted, including: the US market decreased by 54%, to 373 billion VND; the Chinese market decreased by 30%, to 93 billion VND; the European market decreased by 27%, to 142 billion VND; in the Vietnamese market, revenue also decreased by 12%, reaching only 224 billion VND.

Billions of dong lost from Vinh Hoan VHC Securities, continuing to slide with May business results, picture 1 — Not only in the first quarter, Vinh Hoan's (VHC) business results in April and May continued to decline due to plummeting export revenue in many markets (Photo TL)

In the previous April, Vinh Hoan's revenue also decreased by 47%, to only 869 billion VND, showing that the decline in export orders is not just a temporary trend but is an issue that the company needs to pay attention to right now.

Q1 profit drops 60%, interest expenses double in just the first 3 months of the year

According to the 1st Quarter 2023 Financial Statements, Vinh Hoan recorded net revenue of VND 2,222 billion, down 32% over the same period last year. Revenue decreased, selling expenses were also reduced from VND 84 billion to just over VND 50 billion.

However, in return, the cost of business management increased by 17.5% to 69 billion VND. Financial costs, mostly interest expenses, increased sharply, from 42 billion VND to more than 90 billion VND, showing that the company is having to increase debt in its capital structure.

The increased pressure of interest expenses has significantly affected the company's after-tax profit, which was only recorded at VND226 billion, down more than half compared to the same period last year.

Stock investment lost 47%, 3 company leaders resigned in just 3 days

Vinh Hoan's business situation is also partly reflected through the company's asset structure. At the end of the first quarter of 2023, Vinh Hoan's total assets did not fluctuate much, remaining at VND 11,665 billion. Of which, short-term assets accounted for VND 7,714 billion, cash and cash equivalents accounted for VND 848 billion.

Notably, in short-term assets, Vinh Hoan's short-term financial investment index decreased quite sharply, from 1,768 billion VND at the beginning of the period to only 1,270 billion VND. Of which, the company spent up to 179 billion VND to invest in securities. And it should be noted that this investment as of March 31, 2023 only recorded a value of 95 billion VND. Thus, at the end of March, Vinh Hoan's securities investment temporarily lost 47%.

Also in the first 3 months of this year, the company's short-term debt increased from VND2,214 billion to VND2,658 billion, equivalent to an increase of VND444 billion in just 3 months. The most significant debt is worth VND1,157 billion at HSBC Vietnam Bank. In addition, Vinh Hoan is also in debt to the Joint Stock Commercial Bank for Foreign Trade of Vietnam and ANZ Vietnam Bank Limited with two debts worth VND655 billion and VND579 billion.

Immediately after recording ineffective Q1 business results, Vinh Hoan also received resignation letters from 3 senior leaders in just 3 days. The incident caused a stir among the company's shareholders for a period of time.

Specifically, on April 12, 2023, Mr. Nguyen Van Khanh, an independent member of the Board of Directors of Vinh Hoan, submitted his resignation due to the inability to arrange time for work. Mr. Khanh was also the Deputy Director in charge of operating the Ho Chi Minh City branch of Bao Viet Securities Corporation.

The following day, April 13, 2023, Ms. Phan Thi Kim Hoa, a member of the Board of Supervisors, also submitted her resignation. On April 14, 2023, Mr. Le Van Nhat, an independent member of the Board of Directors, also submitted his resignation due to not being able to arrange time for work.

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