How did TDC escape losses?

According to the Q2/2024 financial statement, TDC's revenue dropped by more than 14 billion VND from the previous period, to more than 115 billion VND. After subtracting the cost of goods sold, the company's gross profit fell 3.3% year on year to roughly 33 billion VND.

The highlight of this period was a significant increase in financial revenue, which increased to nearly 125 billion VND from over 1.7 billion VND in the same period last year, representing a 6,150% increase year on year, primarily due to profits from business cooperation contracts, which totaled over 123 billion VND.

Meanwhile, expenses for these operations fell by more than 13% year on year, reaching more than 56 billion VND. Other expenses,, such as sales and administrative costs, were also much lower than the same period last year. Furthermore, other earnings were positive again, after a loss of more than 224 billion VND in the same time previous year.

After deducting expenses, this company's post-tax profit surpassed 74 billion VND, a significant increase from the loss of more than 281 billion VND in Q2 2023. Although finance income saved the company from losses in the second quarter, the core business operations (gross profit minus financial expenditures minus marketing and administrative expenses) resulted in a loss of more than 51 billion VND.

TDC's revenue was more over 234 billion VND in the first half of 2024, an almost 2% decrease from the previous year. Post-tax earnings increased by more than 50 billion VND, compared to a loss of about 322 billion VND in the same time previous year. As a result, the corporation has only met 12.3% of their annual profit objective for 2024.

Despite returning to profitability in the first half of 2024, the company still has accumulated losses of nearly 318 billion VND, accounting for almost 32% of its charter capital (as of the end of Q2, TDC’s charter capital was 1,000 billion VND).

As of the end of Q2, the company’s total assets reached over 3,661 billion VND, a slight increase of 1.4% from the beginning of the year, with the majority being work-in-progress assets totaling over 2,123 billion VND, accounting for 58% of the company's total assets. Short-term and long-term receivables were recorded at 838.5 billion VND.

Meanwhile, TDC's total short-term and long-term debt is over 1,550 billion VND, a slight decrease of nearly 2% from the beginning of the year, while the company’s equity is only over 839 billion VND.

TDC is a subsidiary of Becamex, with a 60.7% stake in its charter capital. The company currently owns a relatively large land bank developed a long time ago at relatively low costs. According to estimates by Mirae Asset Securities, TDC currently owns 19.6 hectares in Tan Uyen District, Binh Duong Province, 16.8 hectares in Thu Dau Mot City, Binh Duong Province, 6.8 hectares in Bau Bang District, Binh Phuoc Province, and 10.2 hectares in Thuy Nguyen District, Hai Phong City, among other locations. This land bank was developed from 2010 to 2015 when land prices in these areas were still relatively low.

Owning a large land bank with low capital costs gives the company many advantages. However, maintaining high cash dividends leads to low cash accumulation, which, when combined with business losses and short-term debt exceeding short-term assets, requires the company to seek new capital sources or continue “wholesale” of existing land banks to generate cash flow.

The firm has previously transferred projects, making funds in the millions of billions of VND. For example, in 2021, TDC transferred 5.6 hectares of land in Thu Dau Mot City to Gamuda Land for around 1,250 billion VND. The firm got 600 billion VND in advance for the transfer of the Uni Galaxy project, which was completed by the end of Q3/2022, resulting in incremental income of more than 1,282 billion VND.