Q1 profit drops 98%, Century Fiber (STK) is having to increase debt

Century Fiber plans to pay 15% dividend in shares instead of cash like every year.

Century Fiber Corporation (Stock code: STK) was formerly Century Production and Trading Company Limited. The company was established in 2000 and listed on HoSE in 2015 with the main business lines being the production of synthetic fibers and knitting.

Recently, Century Fiber has announced the last registration date to receive 2022 stock dividends at a rate of 15%. Correspondingly, each shareholder owning 100 shares will receive a dividend of 15 newly issued shares.

profit per 1st laborer to 98th century stk must increase loan figure 1 — Century Fiber's (STK) Q1 2023 profit dropped by 98% due to a significant reduction in orders (Photo TL)

The expected last registration date is July 5, 2023. The ex-dividend date is July 4, 2023. The dividend payment date will be in the third quarter of 2023.

Regarding the dividend payment history in previous years, in the past 4 years, Century Fiber has paid cash dividends at a rate of 15%, from 2018 to 2021. In August 2022, the company exercised the right to purchase additional shares issued to shareholders at a ratio of 5:1, with a par value of VND 10,000/share. In the trading session on June 20, 2023, STK shares were priced at VND 28,750/share.

Q1 business results plummet but stock prices still increase abnormally

One thing worth noting is that Century Fiber's business results have been continuously declining in recent quarters. Especially in the first quarter, the stock price has not shown any signs of being affected and has even increased compared to the beginning of the year.

Specifically, in the first quarter of 2023, Century Fiber's revenue reached VND 288 billion, down about 55% compared to the same period last year. The high cost of goods sold, accounting for VND 270 billion, left gross profit at only VND 18 billion. Gross profit margin decreased from 17.5% to only 6.3%.

Financial revenue in the period increased 3 times, from 5 billion VND to 15 billion VND, but on the contrary, financial expenses increased sharply from 5 billion to 13 billion VND. Sales expenses and business management expenses were controlled, recorded at 3 billion and 14 billion VND respectively.

After deducting all expenses and taxes, Century Fiber had 1.6 billion VND in after-tax profit, down 98% compared to the same period.

Not only that, if we look at the overall trend of revenue and profit, we can see that both of these indicators of STK have gradually decreased in the last 4 consecutive quarters. Specifically, from the second quarter of 2022, the company's revenue reached 530 billion VND, decreasing gradually each quarter and only 288 billion in the first quarter of 2023. Profit after tax also decreased from 69 billion VND in the second quarter of 2022 to 1.6 billion VND in the first quarter of 2023.

STK explained the sharp decline in revenue by saying that both direct and indirect customers had reduced their orders. This caused the company to incur losses despite having to cut costs.

With negative business cash flow of tens of billions of dong, Century Fiber is having to increase debt.

At the end of the first quarter of 2023, STK's total assets reached VND 2,175 billion, a slight increase compared to the beginning of the year. Of which, inventories accounted for about VND 465 billion, not much fluctuation compared to the beginning of the period.

Cash and cash equivalents increased from VND235 billion to VND311 billion, but the company no longer had the VND180 billion financial investment recorded at the beginning of the period. This shows that STK's highly liquid assets are actually decreasing, not increasing.

Another notable point is that STK's net cash flow from operating activities is currently negative at nearly VND63 billion. The most notable of which is that the interest payable during the period increased from VND1.2 billion to VND3.6 billion. Thus, the interest payable during the period of Century Fiber alone has tripled.

Business is difficult, cash flow is negative, financial indicators on short-term debt of Century Fiber are also increasing. Accordingly, short-term debt increased from 308 billion VND to 348 billion VND, up 13% compared to the beginning of the period.

Source