Heavy cash flow, Khang Dien House borrows trillions in bonds to increase capital

Trillions from bonds poured into real estate

Khang Dien House Investment and Trading JSC (code KDH) has just announced a report on the use of bond capital for two lots KDHH2125001 worth 400 billion VND and KDHH2225001 worth 800 billion VND.

Accordingly, the purpose of using the 2 bond lots is to increase Khang Dien's scale of operations. For the bond lot KDHH2125001 (issued in June 2021), Khang Dien bought back 100 bonds before maturity on December 14, 2021, the outstanding bond volume is 300 bonds, equivalent to VND 300 billion. Thus, the total outstanding bond volume of Khang Dien is 1,100 bonds, equivalent to VND 1,100 billion.

The power plant is borrowing thousands of billions of dong from bonds to fund large-scale real estate projects, picture 1. — Khang Dien House borrows thousands of billions of dong from bonds to 'pump' capital into large-scale real estate projects

Khang Dien said that the company has completed the disbursement as planned for both of these bond lots. Of which, the bond lot worth VND400 billion was used by the company to transfer money to increase capital at Vi La JSC (VND240 billion) and transfer money to Binh Trung Real Estate Investment and Trading Company Limited for loan (VND160 billion).

Regarding the bond lot worth 800 billion VND, the company said it used it to transfer money to increase capital at International Consulting Company Limited, so that this enterprise could contribute more capital to Binh Trung Company, serving the business activities of Binh Trung Company (International Company directly owns 99.9% of the charter capital of Binh Trung Company).

According to research, Binh Trung Real Estate was established in 2014, with Khang Dien's subsidiary, International Consulting, holding 99.9% of shares. This unit operates in the field of real estate business, buying and selling, land investment, trading in land use rights owned by owners, users and leasing. Most of the company's urban area projects are built in Binh Duong , Ho Chi Minh City, and the provinces of the Southeast and Southwest.

Binh Trung Company is the investor of the Clarita project in Thu Duc City, Ho Chi Minh City. The project is planned on a total area of 5.8 hectares and is expected to expand, including two types of products: villas and townhouses.

Heavy negative business cash flow

In 2022, Nha Khang Dien recorded revenue of VND 2,912 billion, down 22% compared to the previous year. Net profit decreased by more than 10% compared to the same period, down to VND 1,082 billion, of which after-tax profit belonging to parent company shareholders reached more than VND 1,100 billion, down 8% compared to 2021.

In 2022, Nha Khang Dien plans to have revenue of VND 4,000 billion and profit after tax of VND 1,400 billion, respectively increasing by 7% and 16% compared to the implementation in 2021. Thus, this real estate enterprise has not completed the plan and has only achieved 77% of the annual profit target.

In a recent report on Khang Dien, VNDirect Securities estimated that KDH's 2023 revenue will decrease by 23.5% year-on-year to VND2,228 billion. The real estate company's 2023 net profit is forecast to decrease by 22.4% year-on-year to VND856 billion due to a lack of extraordinary income.

Not only is business declining, Nha Khang Dien also has a big problem with cash flow. Net cash flow from business activities continues to be negative by more than VND 1,000 billion in 2022. This figure was nearly VND 1,600 billion in 2021. The main reason comes from inventory increasing by more than VND 4,700 billion compared to the beginning of the year to VND 12,453 billion.

To offset the negative cash flow from business operations, Nha Khang Dien has increased its debt sharply in the past year. The balance of financial loans at the end of the period reached nearly VND 6,800 billion, an increase of more than VND 4,200 billion compared to the beginning of the year and accounting for nearly 1/3 of total assets. Of which, the main source is long-term loans with a balance at the end of the period of nearly VND 5,600 billion.

At the end of 2022, Khang Dien House's total assets reached VND 21,539 billion, an increase of nearly VND 7,200 billion compared to the beginning of the year. Khang Dien's equity recorded VND 11,795 billion at the end of 2022, including VND 2,780 billion in undistributed profit after tax.

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