DIC Holdings' financial report looks "better" thanks to insider trading.
Thanks to the sale of 5,270.9 m2 of land at the Chi Linh Central Area Project ( Ba Ria - Vung Tau ) to founding shareholders, DIC Holdings Construction Joint Stock Company has escaped losses in the construction sector and far exceeded its 2023 business plan.
Turn to insider trading when construction operations encounter difficulties.
Amidst a challenging real estate market, like other construction companies, DIC Holdings Construction Joint Stock Company (DC4) was significantly affected. However, DIC Holdings still achieved positive business results thanks to selling off assets in the final days of the 2023 fiscal year.
Specifically, in the construction sector, in 2021, DIC Holdings recorded revenue of VND 513 billion, accounting for 83.6% of total revenue; in 2022, it achieved revenue of VND 216 billion, accounting for 81.5% of total revenue. However, in 2023, revenue from the construction sector only reached VND 304.8 billion, accounting for 52.6% of total revenue, a sharp decline in its proportion compared to previous years.
Conversely, in the real estate sector, in 2022, DIC Holdings recorded revenue of VND 34.35 billion, accounting for 13% of total revenue; in 2023, it achieved revenue of VND 263.88 billion, accounting for 45.5% of total revenue. Notably, in the last quarter of 2023, the company recorded revenue from real estate transfers of up to VND 263.55 billion, accounting for 82.2% of total revenue for the period.
According to our findings, in late December 2023, the Development Investment Construction Corporation (DIC Corp, ticker DIG) unexpectedly approved the transfer of land use rights for Plot A2-1 in the Chi Linh Central Area Project (Vung Tau City, Ba Ria - Vung Tau Province) from DIC Holdings. The land area is 5,270.9 m2, the transfer price is 50 million VND/m2 (excluding VAT), and the total contract value is estimated at 289.76 billion VND.
Thus, the surge in real estate revenue mainly came from DIC Holdings' transfer of the aforementioned 5,270.9 m2 of land. Looking at the quality of gross profit by sector in Q4/2023, DIC Holdings operated below cost in the construction sector, resulting in a loss of VND 10.17 billion, but avoided a loss thanks to the gross profit of VND 201.57 billion recorded in the real estate sector.
For the full year 2023, DIC Holdings recorded revenue of VND 579.65 billion, an increase of 119.7% compared to the same period, and after-tax profit of VND 101.97 billion (compared to a loss of VND 2.05 billion in the same period). The company's business plan for 2023 projected total revenue of VND 510 billion and after-tax profit of VND 2.4 billion.
DIC Holdings is an affiliate of DIC Corp.
DIC Holdings was established in 1994 as the Construction Materials Trading Enterprise under DIC Corp. However, as of December 31, 2023, DIC Corp only owned 35.89% of the capital in DIC Holdings and accounted for it as an investment in an associate company.
DIC Holdings operates in the field of investment and business development of urban and industrial zones; investment and business development of housing and urban infrastructure, industrial zones, export processing zones, and new economic zones. As of the most recent update on the inventory list (details) on June 30, 2023, the Company's largest work-in-progress inventory was VND 330.98 billion for the Chi Linh Center Project (part of the Chi Linh Central Area Project), and VND 84.86 billion for the Ruby Tower Apartment Project…
Reportedly, the Chi Linh Central Area Project, invested by DIC Corp, has an initial total investment of VND 1,113 billion. Of this, the Chi Linh Center project covers an area of 7,482 m2, with a building height of 25 floors and comprising 600 apartments, with a total investment of approximately VND 960 billion. The Ruby Tower project has a total investment of VND 100 billion and a height of 15 floors.
Thus, thanks to DIC Corp being a founding shareholder and still a major shareholder in DIC Holdings, DIC Holdings is still implementing many projects related to DIC Corp, as well as receiving land and developing component projects within large-scale projects where DIC Corp is the investor.
The sale of land plots at the Chi Linh Central Area Project in Q4 2023 helped DIC Holdings record a significant profit in that quarter and for the entire year of 2023. This was essentially an internal transaction between related entities rather than a sale to an external partner.
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