Clever Group (ADG) indulges in financial investment, foreign shareholders withdraw capital

Major shareholder divests from Clever Group (ADG)

Recently, FSN Asia Private Ltd announced the transaction of ADG shares of Clever Group JSC that this unit holds. Accordingly, FASN Asia Private Ltd has registered to sell 840,000 ADG shares. The transaction period is from December 21, 2023 to January 19, 2024 by order matching method.

If the transaction is completed, FSN Asia Private Ltd will reduce its ownership of ADG shares from 9.17 million shares (equivalent to 42.89%) to just over 8.33 million shares (equivalent to 38.96% of charter capital).

Sa Da invested in finance instead of business, clever group adg lost money on foreign capital 1 — Clever Group (ADG) stock price plummets, foreign shareholders withdraw capital (Photo TL)

In August 2023, this fund received a transfer of 8.56 million ADG shares (equivalent to 40.04% of charter capital) from Yello Digital Marketing Global Pte. Ltd and has since become the largest shareholder of ADG. In September 2023, FSN Asia Private Ltd purchased an additional 608,800 ADG shares, increasing its ownership to 42.89%.

The sale of a large amount of ADG shares by a foreign fund, at the same time the largest shareholder of Clever Group, comes in the context that this company has been operating at a loss since the beginning of 2023 until now.

ADG losses, revenue declines

Specifically, in the first 3 quarters of the year, ADG had to record losses for 2 quarters. In the first quarter of 2023, the company achieved net revenue of 82.2 billion VND, gross profit was relatively low, only 11.7 billion VND. ADG lost after tax 1.6 billion VND

In the second quarter of 2023, revenue was recorded at VND 100.1 billion, down 22.2% year-on-year. Gross profit reached VND 10.3 billion. After deducting all expenses, Clever Group earned VND 7.5 billion in profit in the second quarter of 2023.

In the third quarter of 2023, Clever Group's revenue dropped by nearly a third compared to the same period, to VND86.8 billion. Gross profit reached VND8.4 billion, the company's after-tax loss was VND6.4 billion.

Faced with continuous business losses, ADG stock prices have also had negative reflections. From the price of 38,300 VND/share in mid-April, ADG has dropped and is now only recorded at 21,300 VND/share. Equivalent to a price decrease of 44.4% in just the past 8 months.

According to ADG, in the third quarter, some of the company's major customers stopped their contracts to cut costs for marketing activities. Customers from the real estate, FMCG, insurance groups... all encountered difficulties, causing the company's advertising revenue and profits to decrease sharply.

ADG's accumulated revenue in the first 9 months of the year reached 267.7 billion VND. The company lost 1.2 billion VND after tax while in the same period it recorded a profit of 25.8 billion VND.

Advertising company but more than half of assets are invested in finance

Another noteworthy point is that although ADG is a well-known advertising company, the company is devoting most of its assets to financial investment. During this period of business losses, the company's financial investment has increased even more.

Specifically, at the end of the third quarter of 2023, ADG's total assets reached VND 417.2 billion. Of which, cash and cash equivalents accounted for VND 25.3 billion. The company is spending up to VND 222.8 billion on short-term financial investments, 2.3 times higher than at the beginning of 2023.

This financial investment includes VND156.2 billion in term deposits and VND66.6 billion in short-term bond investments. In addition, the company is also investing an additional VND55.5 billion in long-term bonds. If all these financial investments are included, Clever Group is devoting up to 53.4% of its assets to financial investments.

However, in the capital structure, ADG still records mainly from equity with 323.3 billion VND. The company is currently increasing short-term debt to double compared to the beginning of the year, accounting for 49.1 billion VND. Undistributed profit after tax accounts for 83.8 billion VND.

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