Loc Troi Group (LTG) has short-term debt of thousands of billions, must plan business backwards

Loc Troi Group (LTG) expects business results to decline, 2023 profit will not increase but decrease compared to 2022

Loc Troi Group Corporation (Code LTG) has just recorded a year of business decline when after-tax profit decreased despite revenue and gross profit both growing compared to 2021. The company's business situation is also reflected through the capital structure when risks increase, short-term debt exceeds equity. With the business situation going down, it is not too difficult to understand why Loc Troi has just had to reduce its business target plan for 2023.

Loc Troi Group LTG has a budget of thousands of billions and must plan its business to move back and forth, image 1 — Loc Troi Group (LTG) has to regress its business plan, while short-term debt exceeds equity (Photo TL)

Specifically, on the documents of the 2023 Annual General Meeting of Shareholders, scheduled to be held on April 14, 2023 in An Giang province, Loc Troi Group will submit to shareholders for approval the 2023 business plan. In which, the after-tax profit plan is only at 400 billion VND, not only not increasing but also decreasing slightly by 3% compared to the implementation in 2022.

In addition, Loc Troi Group also plans to pay cash dividends at a rate of 25%, corresponding to each shareholder owning 1 share will receive a cash dividend of VND 2,500. With the current number of shares on the market, LTG is expected to spend about VND 201 billion to pay dividends to shareholders. For 2023, the expected dividend payment will be in cash at a rate of 30%.

Loc Troi Group (LTG) revenue increased but profit stagnated, short-term debt exceeded equity

In 2022, Loc Troi recorded revenue of VND 11,690.6 billion, an increase of 14.3% compared to 2021. However, profit after corporate income tax decreased to only VND 411.6 billion. Part of the reason came from the increase in cost of goods sold from VND 8,261.4 billion to VND 9,542.1 billion, an increase of up to 15.5%.

Selling expenses also increased slightly from VND856.2 billion to VND885.1 billion, and administrative expenses increased by 9.3% to VND397.6 billion. Most notably, financial expenses increased sharply from VND347.7 billion to VND492.2 billion, mainly interest expenses, accounting for VND239.1 billion.

By the end of 2022, Loc Troi Group's total assets reached VND 8,731.3 billion, a slight increase of about 11.3% compared to the beginning of the year. Although total assets increased, the flexibility of Loc Troi Group's assets also decreased when the financial indicator of cash and cash equivalents decreased by nearly VND 1,000 billion, down to only VND 799.5 billion in 2022.

Meanwhile, short-term receivables increased from VND1,605 billion to VND3,105.1 billion. This means that a large part of Loc Troi's revenue is in the form of receivables and the money has not actually "reached" the company.

Another notable point is that Loc Troi's short-term borrowing and financial leasing debt accounts for VND 3,747.8 billion, higher than its current equity. Loc Troi Group's current equity is only VND 3,152.4 billion, including VND 1,287 billion in undistributed profit after tax. Equity capital accounts for only VND 805.9 billion, and equity surplus accounts for VND 278.1 billion. This means that risks are present in Loc Troi's capital structure.

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