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

Profit down 56.7%, CKG is behind schedule

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. In which, the company recorded net revenue of VND 263 billion, down 29.5% over the same period. Gross profit reached VND 87 billion, corresponding to a gross profit margin increase from 30% to 33%.

Revenue recorded during the period mainly came from social housing projects, accounting for 63% of total revenue. According to CKG's explanation, the profit margin of social housing projects is relatively low, only less than 10% of total investment. This has partly affected the company's total profit margin.

CIC Group (CKG) recorded a halving of profits, debt overwhelming equity in the second quarter of 2024 (Photo TL)

During the period, financial expenses decreased slightly from VND8.6 billion to VND7.1 billion. Business activities at the associated company also lost VND162 million. In addition, selling expenses decreased from VND10.7 billion to VND7.9 billion. However, business management expenses increased by one and a half times, to VND39.4 billion.

As a result, profit after tax in the second quarter of 2024 was recorded at VND 25.4 billion, down 56.7% over the same period last year.

Accumulated revenue in the first 6 months of the year reached 544 billion VND, down 18%. Meanwhile, accumulated profit after tax only reached 51.8 billion VND, down 34.3% over the same period.

In the plan approved at the 2024 General Meeting of Shareholders, the annual revenue target is 1,220 billion VND, of which real estate revenue accounts for 95%. The target after-tax profit is 142 billion VND. Currently, CKG has completed 44.5% of the revenue plan and 36.4% of the annual profit plan.

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

At the end of the second quarter of 2024, CKG's total assets reached VND 4,745 billion, unchanged from the beginning of the year. Of which, the amount of cash the company holds is relatively low, only recording nearly VND 30 billion.

Most of CKG's assets are in the form of inventory, accounting for VND3,012 billion, equivalent to 63.5% of total assets. Most of the inventory is production and business costs in progress at projects that CKG is implementing.

Notably, CKG's capital structure also shows potential risks when liabilities overwhelm equity. Even if only considering debt alone, it has already exceeded the current equity size.

Specifically, payables are currently 3,342 billion VND, equivalent to 70.4% of the company's total capital. Of which, short-term debt accounts for 1,573 billion VND, long-term debt accounts for 369 billion VND. Total debt is currently 1,942 billion VND.

Meanwhile, equity only accounts for 1,403 billion VND, nearly 450 billion VND lower than the current debt.

Regarding ongoing projects, CKG noted key projects including An Binh project, Nam An Hoa, Northwest new urban area in Rach Gia city and Rivera Villas project in Phu Quoc.

Of which, the Northwest new urban area project is expected to contribute the highest proportion of revenue with a scale of 99.4 hectares, total investment capital of 3,714 billion VND. The project scale 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