CIC Group (CKG) profit decreased by 56%, high debt overwhelmed equity

Profits fell by 56.7%, CKG is lagging behind its planned targets.

Kien Giang Construction Investment Consulting Group Joint Stock Company – CIC Group (Code: CKG) has just announced its business results for the second quarter of 2024. The company recorded net revenue of VND 263 billion, a decrease of 29.5% compared to the same period last year. Gross profit reached VND 87 billion, corresponding to a gross profit margin increase from 30% to 33%.

Revenue for the period was largely generated from social housing projects, accounting for 63% of total revenue. According to CKG's explanation, the profit margin for social housing projects is relatively low, less than 10% of the total investment. This has partially impacted the company's overall profit margin.

CIC Group (CKG) reports a 50% drop in profit and debt outweighs equity in Q2/2024 (Photo: TL)

During the period, financial expenses decreased slightly from VND 8.6 billion to VND 7.1 billion. Business operations at associated companies also incurred a loss of VND 162 million. In addition, selling expenses decreased from VND 10.7 billion to VND 7.9 billion. However, administrative expenses increased by 1.5 times, reaching VND 39.4 billion.

As a result, after-tax profit in Q2/2024 was recorded at VND 25.4 billion, a decrease of 56.7% compared to the same period last year.

Cumulative revenue for the first six months of the year reached VND 544 billion, a decrease of 18%. Meanwhile, cumulative after-tax profit only reached VND 51.8 billion, a decrease of 34.3% compared to the same period last year.

According to the plan approved at the 2024 Annual General Meeting, the revenue target for the year is VND 1,220 billion, of which revenue from real estate accounts for 95%. The target after-tax profit is VND 142 billion. Currently, CKG has achieved 44.5% of the revenue target and 36.4% of the profit target for the whole year.

Liabilities account for 70% of total capital, overwhelming equity.

At the end of Q2/2024, CKG's total assets reached VND 4,745 billion, remaining unchanged compared to the beginning of the year. Of this, the company's cash holdings were relatively low, at only nearly VND 30 billion.

The majority of CKG's assets are in the form of inventory, amounting to VND 3,012 billion, equivalent to 63.5% of total assets. Most of this inventory consists of work-in-progress production and business costs at projects that CKG is currently implementing.

Notably, CKG's capital structure also reveals potential risks, with liabilities significantly exceeding equity. Even considering only debt, the current equity already surpasses the company's overall capital.

Specifically, liabilities currently amount to VND 3,342 billion, equivalent to 70.4% of the company's total capital. Of this, short-term debt accounts for VND 1,573 billion, and long-term debt accounts for VND 369 billion. The total outstanding debt currently stands at VND 1,942 billion.

Meanwhile, equity capital only amounts to VND 1,403 billion, nearly VND 450 billion lower than the current debt level.

Regarding ongoing projects, CKG notes that key projects include the An Binh project, Nam An Hoa project, the Northwest new urban area in Rach Gia City, and the Rivera Villas project in Phu Quoc.

Of these, the Northwest New Urban Area project is expected to contribute the highest proportion of revenue, with a scale of 99.4 hectares and a total investment of 3,714 billion VND. The project includes 440 commercial plots and 1,469 houses.

Source: https://www.congluan.vn/cic-group-ckg-loi-nhuan-giam-56-no-vay-cao-ap-dao-von-chu-so-huu-post306259.html