Why is TDC suspected of its going concern?

According to the recently issued audited financial report for 2023, TDC's net revenue decreased by more than 40% compared to the self-reported financial statement and by more than 88% compared to 2022, totaling more than 300 billion VND.

Notably, the company's post-tax loss climbed by 37 billion VND from the self-reported figure, totaling roughly 403 billion VND. This is also the company's largest loss since listing its shares on the stock market in 2010. According to the company's leadership, the cause for the unsuccessful commercial operation is the liquidation of real estate projects that failed to fulfill legal requirements.

Another important feature in the audited financial report for 2023 is that the auditing unit recognized TDC's net loss of about 403 billion VND. Furthermore, the auditors raised concerns about the company's capacity to continue operations because, by the end of 2023, TDC's short-term debt had surpassed its short-term assets by more than 1.331 trillion VND.

In response to the auditors' opinion, TDC stated that the parent company, Becamex IDC Corporation, and other companies in the same group have committed to financially supporting TDC by guaranteeing loan debts and not requiring the company to repay the debts for goods and services until it is able to do so. As a result, the consolidated financial report was nonetheless prepared based on the going concern assumption.

According to the 2024 annual general meeting of shareholders document, TDC has set a business plan objective of over 1.993 trillion VND in revenue, a huge growth of over 564% from 2023; both pre-tax and post-tax profits are more than 218.4 billion VND.

TDC's leadership believes that in the early months of 2024, the real estate market would still confront several obstacles, including a delayed rebound in home demand and pressure on businesses to service large borrowing obligations.

However, many experts predict that the domestic real estate market will recover more clearly in the second quarter of 2024 as a result of positive changes in the legal field, such as addressing capital source issues, administrative procedures, and the implementation of new laws, as well as the widespread deployment of supportive policies and macroeconomic stability.

Funding for real estate is gradually returning as interest rates fall and businesses lower their financial responsibilities, while the corporate bond market opens up. The government is working on infrastructure development and construction, as well as enhancing the legal framework for real estate.

According to the company's leadership, the corporate bond market has improved, but the need to repay bond debts remains. However, in 2023, credit capital for the real estate sector was not made available to enterprises; as a result, with limit ed capital, enterprises shifted their investment to the segment of affordable commercial houses and social housing, paving the way for a new promising direction for real estate business in 2024.

TDC intends to operate the following projects in 2024: Uni-Town commercial and service urban area, which is expected to open in 2024 with 65 units and a total revenue of approximately 344 billion VND; and TDC Plaza project, which is expected to open in 2024 with the completion of blocks A, B, C, D, and the shopping center. The overall revenue from transferring the entire project is estimated to be 630 billion VND. Additionally, the firm wants to transfer inventory items, which include land lots in Chơn Thành, Cocoland, and Westernland developments, with an expected value of 203 billion VND.

In the construction sector, in 2024, the Company will focus on completing legal documents to sign cooperation contracts for construction of the Social Housing Project in VSIP Area 6 with a value of 1.085 trillion VND (2024 revenue: 300 billion VND); Complete acceptance and settlement procedures with Becamex IDC Corporation at two projects, including the high-class Dragon Hill villa area (20.9 billion VND), and the foundation of the Bàu Bàng industrial park workshop (2.2 billion VND).

TDC will sign contracts and build technical infrastructure for traffic roads, rainwater drainage, and sewage drainage in Bàu Bàng industrial park (20 billion VND), National Highway 13 infrastructure (20 billion VND), and Becamex Bình Định industrial park (100 billion VND).

In 2024, TDC will focus on restructuring initiatives in the commercial concrete production sector; upgrading, studying, and creating commercial concrete products, as well as finding new raw material sources to minimize prices while maintaining quality.