CIC Group (CKG) has all debt assets, still issuing 201 billion more shares

CIC Group (CKG) is offering 13.4 million shares to raise 201 billion VND.

On September 11, 2023, CIC Group (stock code CKG) approved the continuation of its private placement of 13,400,219 shares to professional securities investors. The offering price will be VND 15,000 per share. Thus, with this offering, CIC Group expects to raise VND 201 billion.

Previously, CIC Group had also planned to conduct a similar share offering with the same number of shares and price. The 201 billion VND expected to be raised under this plan would be used as follows: VND 97.3 billion to pay off debts to contractors; VND 96.8 billion to pay off maturing loans; and VND 6.9 billion to purchase materials and pay salaries to employees. Thus, the majority of the proceeds from the offering would be used to repay debts.

CIC Group CKG continues to raise 201 billion VND through a public share issuance. — CIC Group (CKG) raises an additional 201 billion VND through share issuance (Photo: Provided)

Regarding business performance, in Q2/2023, CIC Group achieved revenue of VND 372.8 billion, a decrease of 7.2% compared to the same period last year. Gross profit reached VND 113.2 billion, and the gross profit margin decreased from 31.1% to only 30.4%.

Expenses fluctuated during the period, notably financial expenses increased to VND 8.6 billion, a 59% increase. Selling expenses and administrative expenses amounted to VND 3.9 billion and VND 34.8 billion respectively. CKG's after-tax profit reached VND 58.6 billion, a decrease of 16.5% compared to the same period last year.

CKG's cumulative revenue for the first six months of the year reached VND 623.9 billion, and after-tax profit reached VND 84 billion. Compared to the 2023 target of VND 1,234.9 billion in revenue and VND 175 billion in after-tax profit, the company has only achieved 47.1% of its revenue target and 48% of its profit target for the year.

Despite having trillions in assets, the majority is debt, and cash reserves have decreased by more than three times, remaining at a low level.

As of the end of Q2/2023, CKG's total assets reached VND 4,729 billion, a slight decrease compared to the beginning of the year. Notably, the company only held VND 20.5 billion in cash. In addition, the company had VND 3.5 billion in bank deposits.

Compared to the beginning of the period, the company's cash reserves have decreased by nearly 70%. Bank deposits have also decreased from 14.7 billion to 3.5 billion VND, equivalent to a 76% reduction.

In CIC Group's asset structure, inventory currently accounts for VND 2,839.6 billion, a slight increase compared to the beginning of the year. The majority of this consists of work-in-progress production and business costs. Goods and raw materials only account for just over VND 5 billion.

In terms of capital structure, the majority of CKG's assets are recorded as debt, amounting to VND 3,416.7 billion, equivalent to 72.2% of total existing capital.

Of this, short-term debt accounts for VND 664.9 billion. Long-term debt and financial leases also amount to VND 891.2 billion. The total debt of CKG currently stands at VND 1,556.1 billion, exceeding its current equity by 18.6%.

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