Lizen (LCG) leader sells 5 million shares with unusual increase in stock price

LCG stock price increased abnormally 2.7 times in just 6 months, leaders quickly sold 5 million shares

Lizen Joint Stock Company (Code LCG) is the predecessor of Construction Company 16, established in 2001 and listed on the HoSE stock exchange since 2008. The company's main business areas are construction of civil works, industrial works, transportation, irrigation, power transformer lines...

In the first half of 2023, the stock code LCG is being mentioned by many investors when the stock price continuously increases unusually. Because during this time there is no special news about the company, Lizen's business results also decline in complete contrast to the increase in stock price.

Lizen - Licogi 16 JSC (LCG) profit in the first quarter of 2023 decreased by 80% but the stock price still increased 2.7 times in just 6 months (Photo TL)

Since November 2022, LCG's stock price has bottomed out at only VND5,000/share. However, as of today, in the trading session on June 20, 2023, LCG is currently trading at a price of up to VND13,500/share. This means that LCG's stock price has increased by 2.7 times in just 6 months despite the decline in business results.

Coincidentally, during this unusually strong stock price increase, the company's leader, Mr. Nguyen Van Nghia, a member of the Board of Directors, registered to sell 5 million LCG shares, reducing his ownership from 7.71% to only 5.1% of the charter capital. The transaction was registered from June 8 to June 16.

Revenue and profit decline for 4 quarters, business results in Q1 2023 are the lowest in the past 6 years

Regarding Lizen's business situation, in the first quarter of 2023, the company recorded net revenue of only VND 242 billion, although it increased by 33.7% over the same period last year, but on the contrary, the company's after-tax profit only reached VND 10 billion, down 80% over the same period.

According to the company's explanation, the reason for the increase in revenue and sharp decrease in profit is because in the first quarter of 2022, the company recorded a sudden profit from the transfer of capital contributions at member companies. In 2023, this financial revenue no longer exists, so the company's profit has dropped sharply.

Despite the reason, it should be noted that this after-tax profit is the lowest level that LCG has ever achieved in the past 6 years, since Q3 2017. In Q3 2017, LCG recorded net revenue of up to 335 billion VND but after-tax profit was only nearly 9 billion VND.

Also in the first quarter of 2023, the company's cost of goods sold increased sharply from VND 141 billion to VND 207 billion, an increase of 47%, causing gross profit to only VND 35 billion, gross profit margin decreased from 22% to only 14.4%.

Although financial costs have been reduced from 23 billion VND to only 11 billion VND, business management costs are still high, about 17 billion VND, causing the after-tax profit of the first quarter to only be over 10 billion VND.

Short-term debt risk is almost as high as equity, more than 1,823 billion VND of assets are in the form of receivables but have not been actually received.

Lizen's asset structure as of the end of the first quarter of 2023 recorded total assets at VND 5,289 billion, about VND 242 billion higher than at the beginning of the year. Notably, receivables account for a very large proportion.

Total receivables are currently 2,396 billion VND, with receivables from customers accounting for 1,823 billion VND. These are all amounts awaiting collection from customers and partners, so they are only on paper, and this type of asset accounts for 45.3% of Lizen's total assets.

The company's inventory has not fluctuated much, still accounting for about 22.3% of total assets, equivalent to about VND 1,182 billion.

In Lizen's capital structure, liabilities account for VND 2,699 billion, mainly short-term debt, accounting for VND 2,517 billion. Owner's equity accounts for about VND 2,590 billion with VND 1,916 billion of owner's capital. Thus, it can be seen that short-term debt is higher than owner's capital and is almost as high as Lizen's current equity.

Source: https://www.congluan.vn/kinh-doanh-lao-doc-co-phieu-van-tang-gia-gap-doi-lanh-dao-lizen-lcg-nhanh-chong-ban-5-trieu-co-phieu-post252394.html