Deo Ca Transport Infrastructure Investment JSC (Stock code: HHV) has just recorded a remarkable business quarter with the highest quarterly profit since listing. However, the figures in the report also revealed the debt situation, especially the important partnership with a large Big4 bank.
As of the end of the second quarter, Deo Ca's total loans and financial leasing debts recorded more than VND20,000 billion, accounting for 73% of total liabilities and more than double the company's equity. Of this, the Hanoi branch of a bank alone has financed Deo Ca with more than VND19,000 billion, mainly long-term loans of 3-5 years. According to the Financial Statements' explanatory notes, the total limit that this bank granted to Deo Ca is more than VND22,000 billion, with many loan contracts having long terms from 15 to 26 years.
Deo Ca's loan contracts with banks are secured mainly by the right to collect fees from BOT projects, in addition to capital contributions, house use rights, and car registrations.
Deo Ca is considered a leading enterprise in traffic infrastructure investment, known as the "boss" of tunnel drilling in Vietnam. Projects that have made Deo Ca's brand include: Deo Ca road tunnel (including Deo Ca tunnel, Co Ma tunnel, Cu Mong tunnel, Hai Van tunnel) with a total investment of more than 21,612 billion VND; Cu Mong tunnel project; Hai Van tunnel (phase 2); Co Ma tunnel; Phuoc Tuong - Phu Gia tunnel, etc.
This enterprise also expanded the construction of expressways with a series of key projects such as: Trung Luong - My Thuan, Bac Giang - Lang Son expressway, Huu Nghi - Chi Lang expressway, Hong Dang - Tra Linh expressway, Van Don - Mong Cai expressway, investment project to expand National Highway 1A through Khanh Hoa province, Tan Phu - Bao Loc expressway, Dong Dang - Tra Linh expressway, Huu Nghi - Chi Lang border gate expressway, etc.
Thanks to revenue from BOT toll stations and profits from business cooperation contracts, Deo Ca has just reported a record high net profit in the second quarter of nearly VND95 billion, up 18% over the same period.
According to the consolidated financial statements for the second quarter of 2023, HHV recorded net revenue of more than VND 612 billion, an increase of 24%. After deducting the cost of goods sold, the Company reported a gross profit of VND 287 billion, an increase of 11%. Gross profit margin reached 47%. Revenue from BOT toll stations accounted for the majority with nearly VND 405 billion, followed by construction and installation activities of more than VND 191 billion.
Financial expenses increased by 13% to VND176 billion, with interest accounting for the majority. However, cutting other expenses, such as management costs, helped the company post a net profit of nearly VND95 billion in the second quarter, up 18% year-on-year. This is also the quarter with the highest net profit ever for Deo Ca.
In 2023, HHV plans to have a total consolidated revenue of VND 2,478 billion and a profit after tax of nearly VND 339 billion, respectively increasing by 18% and 14% compared to 2022. In the first 6 months of the year, Deo Ca has completed 47% of the total revenue target and 57% of the profit after tax target.
At the end of the second quarter, the company's assets reached over VND36,000 billion, a slight increase compared to the beginning of the year. Of which, HHV held VND392 billion in cash and cash equivalents, mostly bank deposits of VND216 billion. Short-term receivables remained unchanged at nearly VND456 billion. Inventory value was over VND213 billion, up 33% compared to the beginning of the year. Construction in progress cost nearly VND33 billion, up 139%.
Notably, the debt burden continues to swell. Deo Ca's liabilities are recorded at over VND27,500 billion, an increase compared to the beginning of the year. Of which, short-term loans and financial leasing debts are over VND1,065 billion, long-term financial loans account for the majority with VND19,309 billion.
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