Thanh Cong Textile (TCM) is behind schedule in its 2023 profit plan.

Thanh Cong Textile - Investment - Trade Joint Stock Company (TCM) lacks orders in the second quarter, the garment market has not recovered

In its May 2023 business results report, Thanh Cong Textile - Investment - Trade Joint Stock Company (TCM) announced a 25% decrease in revenue compared to the same period last year. In addition, the company is also experiencing a shortage of orders in the second quarter.

At the 2023 Annual General Meeting of Shareholders held on June 30, 2023, Chairman Tran Nhu Tung of TCM also shared that the textile market has not yet had a clear recovery. Many small orders show that customers are afraid of having to store inventory, so they place orders in small quantities and more cautiously. Mr. Tung personally believes that the market will not recover until the end of 2023.

Successful commercial investment firm selling stocks, slow-moving plan for 2023, picture 1 — Thanh Cong Textile - Investment - Trade's business declined in the first half of the year. Despite selling SAV shares, the year's profit plan is still behind schedule (Photo TL).

Regarding TCM's business situation, in the European and American markets, people's shopping demand is not high and companies are prone to inventory, profit margins of orders also decrease in the context of low demand and competition.

In addition, the textile industry in Vietnam also has to compete with Bangladesh, the world's second largest textile exporter. According to Mr. Tung, Bangladesh has an advantage over Vietnam thanks to its low labor costs and its currency, which is falling more sharply than Vietnam's.

This is the reason why the company's business situation in the second quarter is not optimistic, and TCM has only received 77% of the planned orders for the third quarter of this year.

Slow annual profit plan despite including profit from selling SAV shares

According to the business plan set at the beginning of the year, TCM will reach 3,927 billion VND, down 9% compared to last year. Profit after tax reached 245 billion VND, down about 13% compared to the same period.

However, up to now, TCm's estimated revenue for the first 6 months of the year has only reached 1,571 billion VND, and after-tax profit has reached 106 billion VND. Thus, compared to the target plan set for 2023, after half a year, the company has only completed 40% of the profit plan and 43% of the annual revenue plan.

More notably, according to TCM, this after-tax profit included 1.3 million USD in after-tax profit from selling Savimex shares (Code SAV). Without this revenue of nearly 31 billion VND, TCM would have only completed 30.6% of the year's profit plan.

TCM replaced a series of senior personnel before the General Meeting of Shareholders, stopped factory construction to transfer land plot in Vinh Long

In the face of many economic fluctuations, TCM's revenue records also showed a decline in the first half of 2023. The company also changed a series of senior personnel right before the annual General Meeting of Shareholders.

Specifically, TCM has just appointed Mr. Lee Hyoung Kyu as Strategic Director and Capital Representative of TC Tower Co., Ltd. from June 19, 2023. At the same time, TCM also appointed Mr. Han Kwang Taek as Creative Director and Capital Representative of TC Commerce Co., Ltd. from June 19, 2023.

Two former employees, Mr. Choi Haeoi and Ms. Huynh Thi Thu Sa, no longer represent the capital contributions of TC Tower and TC Commerce at TCM.

Regarding the new business orientation in 2023, a notable point is that TCM plans to stop construction of the factory expansion with a scale of 1,500 workers and an investment capital of 190 billion VND in Vinh Long.

According to Chairman Tung, TCM used to rent this land for 26 USD/m2 and the current market transfer price is 80-85 USD/m2. Thus, if the remaining land of the project is transferred, the company will have capital to use for M&A of another factory.

Garment factory 2 project in Hoa Phu industrial park, Vinh Long province with an area of 3.2 hectares was started by TCM in May 2021 with an initial investment capital of about 12 million USD (excluding land rental costs).

Source