Truong Thanh Wood (TTF) lost 426 billion VND, almost equal to equity

Truong Thanh Wood (TTF) General Meeting of Shareholders approved to cancel the debt of 426 billion VND, almost equal to the owner's equity.

At the 2023 Annual General Meeting of Shareholders, Truong Thanh Wood Joint Stock Company (TTF) announced its 2022 business results along with its business target plan for the upcoming 2023 with many notable contents.

Specifically, in 2022, the company's audited financial statements recorded revenue at VND 2,001.3 billion. The profit after tax changed from a profit of VND 6 billion to a loss of VND 1.2 billion. Although revenue recorded a 24.5% growth compared to 2021, the profit was negative.

TTF accepts 426 billion dong in debt, nearly equal to 1 equity — Truong Thanh Wood (TTF) has just accepted to lose a debt of 426 billion VND, nearly as large as the company's equity. (Photo TL)

Entering 2023, Truong Thanh Wood aims to achieve revenue of VND 2,222 billion, an increase of 10.3% over the same period. The parent company's after-tax profit reached VND 54 billion, a significant increase compared to the loss of VND 1.2 billion recorded in the audited financial statements.

Commenting on the business situation in 2023, the company's board of directors said that this will still be a difficult year for wood processing enterprises when the shortage of orders continues. At the same time, competition on product selling prices to get orders between production units will cause the product selling price level to be lowered, making it difficult for the company to find new orders.

In addition to the relatively ambitious business target of 54 billion VND in planned profit, Truong Thanh Wood also announced a plan to eliminate bad debts that have been accumulated for many years. These uncollectible receivables account for 426 billion VND.

This means that Truong Thanh Wood accepts a loss of up to 426 billion VND. This is not a small amount of money because according to Truong Thanh Wood's asset structure, this amount is even nearly as large as the company's Equity as of December 31, 2022.

Total debt assets, short-term debt risk is 3 times higher than equity

As mentioned above, the bad debt that the company's management "considered lost" amounted to 426 billion VND, accounting for a significant portion of Truong Thanh Wood's asset structure.

At the end of 2022, Truong Thanh Wood's total assets were recorded at VND 3,006.1 billion, a slight increase compared to the beginning of the year. However, the increase was mainly recorded in the form of liabilities.

Truong Thanh Wood's capital structure also has a large part of payable debt, accounting for 2,573.2 billion VND, equivalent to 85.6% of the total capital that the company is using. Owner's equity only accounts for 432.9 billion VND, even this owner's equity is only slightly larger than the bad debt that the company has just "considered lost".

It is worth mentioning that in the debt structure of Truong Thanh Wood, short-term debt accounts for 1,503.5 billion VND, 3.5 times higher than equity. This will cause a huge risk in capital management of Truong Thanh Wood.

A series of senior leaders resigned right before the 2023 Annual General Meeting of Shareholders

Even more noteworthy is that right before the 2023 General Meeting of Shareholders was held, a series of senior leadership positions of Truong Thanh Wood also resigned.

Specifically, on April 3, 2023, the company announced the resignation of Ms. Tran Thi Huong from the position of member of the Board of Directors for the 2022-2027 term. Ms. Huong was appointed to the position of member of the Board of Directors of Truong Thanh Wood since April 2022. Ms. Huong is also Vice Chairman of the Board of Directors of KSFinance Investment JSC.

At the end of February, Truong Thanh Wood also received a resignation letter from Mr. Duong Quoc Nam as an independent member of the Board of Directors for personal reasons, unable to arrange time to take on the position assigned by the company. Mr. Duong Quoc Nam has been a member of the Board of Directors of Truong Thanh Wood since April 2020.

The fact that senior leaders of Truong Thanh Wood continuously submit resignations, especially in the context of the company facing many difficulties as it is now, is also raising questions for many investors. This has also been reflected in the stock price of this unit.

In the trading session on April 27, 2023, TTF shares of Truong Thanh Wood were only traded at 4,320 VND/share, a sharp decrease compared to 1 year ago.

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