Thanh Cong Textile (TCM) sees Q2 profits plummet by 95.8%.

Thanh Cong Textile (TCM) plans to issue 10.65 million bonus shares.

Despite challenging business conditions and an anticipated shortage of orders in the final months of the year, Thanh Cong Textile (TCM) is still planning to issue bonus shares to shareholders.

Specifically, TCM plans to issue 10.65 million bonus shares to shareholders, equivalent to an issuance ratio of 13%. This means that each shareholder owning 100 shares will receive an additional 13 newly issued shares.

Textile manufacturing success TCM Q2 profit 958 Figure 1 — Thanh Cong Textile (TCM) reports a 95% drop in Q2 profits (Photo: Provided)

The newly issued shares have a par value of VND 10,000, bringing the total value of this issuance to VND 106.5 billion. The capital for the issuance will be drawn from the development investment fund recorded in the company's financial statements as of December 31, 2022. TCM's charter capital will increase to VND 927 billion after the bonus share issuance.

On March 30, 2023, Thanh Cong Textile and Garment Company also announced the first interim dividend payment for 2022 in cash. Shareholders received an interim dividend at a rate of 7%, meaning each shareholder owning one share would receive 700 VND.

Business declined for two consecutive quarters, with profits falling by as much as 95.8% in the second quarter.

The decline in Thanh Cong Textile's business performance is clearly reflected in its financial results report for the first two quarters of 2023. Specifically, in the first quarter, TCM achieved revenue of VND 876.4 billion, a decrease of 21.9% compared to the same period last year. Net profit after corporate income tax reached VND 55 billion, a decrease of 25.4%.

In the second quarter, TCM's business performance continued to decline, with revenue falling to only VND 714.5 billion. Net profit after corporate income tax was a mere VND 2.3 billion, a decrease of 95.8% compared to the same period last year.

Cumulative revenue for the first six months of the year reached VND 1,590.9 billion. Gross profit was VND 230.8 billion. Financial expenses increased slightly to VND 57.9 billion. However, interest expenses nearly doubled to VND 20.1 billion, indicating increasing debt pressure within TCM's asset structure.

The company's cumulative after-tax profit reached only VND 57.3 billion, a decrease of 55.5% compared to the first six months of 2022.

Order shortage in Q2, forecast of difficulties in Q3.

The business situation of Thanh Cong Textile and Garment Company was predicted as early as May when the company announced a 25% decrease in business results compared to the same period last year. A shortage of orders occurred in the second quarter, and the company has only received 77% of its planned orders for the third quarter. This foreshadows a less than optimistic business outcome for the company.

At the end of the second quarter, TCM's total assets reached VND 3,348.7 billion. The company holds a significant amount of cash and deposits. Cash holdings amounted to VND 303.9 billion, while bank deposits totaled VND 307.6 billion. Inventory was recorded at VND 1,225.1 billion, a slight decrease compared to the beginning of the year.

In its capital structure, short-term debt currently accounts for VND 805.7 billion. The company's long-term debt has decreased from VND 140.1 billion to VND 90.9 billion. TCM's total liabilities amount to VND 1,415.1 billion, while equity stands at VND 1,933.6 billion.

In terms of equity, it is noteworthy that undistributed after-tax profits only amounted to VND 612.2 billion, a decrease of over VND 100 billion compared to the beginning of the year. Meanwhile, the development investment fund also accounts for a large proportion of VND 399.5 billion.

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