What is NRC planning with its move into agriculture?

Danh Khoi Group JSC (HNX: NRC) plans to enter cooperation agreements with three agricultural firms in order to promote high-tech agriculture, as per a recently issued decision from the Board of Directors. Buon Ja Wam Forestry Co., Ltd. (BJW), Ea H'leo Forestry Two-Member Co., Ltd. (EHL), and Vien Phu Trading and Manufacturing Co., Ltd. are some of these businesses.

With its main office located in U Minh District, Ca Mau Province, Vien Phu Trading and Manufacturing Co., Ltd. is an expert in the processing and preservation of fruits and vegetables. Based in Dak Lak Province, the other two businesses mostly deal with forestry plantations, forest maintenance, and forestry seedling development.

NRC is making this move into agriculture as the real estate market remains challenging and the company experienced a loss in 2024.

Specifically, NRC’s consolidated financial report for Q4/2024 shows that its net revenue reached just over VND 1.3 billion, while costs soared—interest expenses alone rose to over VND 25 billion, up more than 56% year-on-year. Administrative expenses also surged to over VND 25.3 billion, compared to a negative VND 71 billion in the same period last year. The company recorded a post-tax loss of nearly VND 47 billion, whereas it had a profit of nearly VND 30 billion in the same period last year.

For the whole of 2024, NRC’s net revenue was just over VND 5 billion. Due to the heavy burden of administrative costs, post-tax losses amounted to over VND 63 billion. The company noted that by the end of 2024, its business situation had yet to improve due to a sluggish real estate market and disappointing sales, which prevented revenue recognition from investment cooperation contracts.

As of December 31, 2024, NRC’s total assets were VND 2,006 billion, slightly down from the beginning of the year. Liabilities totaled VND 454 billion, accounting for 46% of total liabilities. Interest expenses alone in 2024 amounted to VND 53 billion, significantly impacting business results. The company’s equity stands at VND 1,230 billion. Notably, its cash balance has dwindled to less than VND 1 billion. Despite consecutive large losses in 2022 and 2024, NRC still has VND 178 billion in undistributed profits.

In addition to incurring losses, NRC owes hundreds of billions in unpaid taxes, prompting the Ho Chi Minh City Customs Department to enforce measures by suspending customs clearance for imported and exported goods.

The reason for this enforcement, according to the HCMC Customs Department, is that the company has overdue tax debts exceeding 90 days. The total enforced amount exceeds VND 115 billion. The enforcement decision is effective from February 28, 2025, to February 27, 2026, and will be lifted once the company fulfills its tax obligations to the state budget.

Previously, during its June 2024 annual general meeting, NRC made headlines for its intention to purchase a portion of Mr. Huynh Uy Dung's (also known as Dung "lime kiln") Dai Nam Residential Area project.

As a result, a plan to raise VND 1,000 billion through a private share sale was authorized by the firm. The money obtained from this selling was meant to be used for debt repayment and new project investments, including a noteworthy proposal to spend VND 195 billion to purchase a portion of the Dai Nam Residential Area project. The business also intended to utilize VND 90 billion to pay back BIDV Bank loans, VND 320 billion to repay issued bonds, and VND 110 billion to entirely cover past-due tax obligation.

NRC Chairman Le Thong Nhat stated that if funds could be raised, NRC would negotiate with Dai Nam to acquire the project, focusing on low-rise products with land-use right certificates and completed infrastructure. However, to date, the fundraising plan has not materialized.

Returning to NRC’s plan to move into agriculture, negotiations are still underway, and specific cooperation details have yet to be disclosed. Therefore, it’s too early to expect a breakthrough in the company’s strategy. Nevertheless, as NRC plans to collaborate with shareholders and entrepreneurs to expand an ecosystem across various sectors—real estate, construction materials, livestock, import-export, finance, and tourism—it’s possible that NRC has identified a unique path to escape its current struggles in real estate.