Danang House (NDN) Q1 cash flow negative 100 billion still sets high target for 2023

Growth target in 2023 is nearly 6 times higher than that achieved in 2022

According to documents published for the upcoming 2023 Annual General Meeting of Shareholders, Danang Housing Development Investment Joint Stock Company (Code NDN) has announced its revenue target for the year at VND 388 billion, nearly 6.8 times higher than the actual figure in 2022.

The company's after-tax profit plan is also expected to be at 160 billion VND, a sharp increase compared to the loss of 143 billion VND in 2022.

Hundreds of billions of dong in the first quarter of Da Nang city still achieves high goals in 2023, picture 1 — Despite heavy losses in 2022, Nha Da Nang (NDN) still sets a business target nearly 6 times higher for 2023. (Photo TL)

Da Nang House said that to implement this plan, the company plans to speed up the process of applying for land use right certificates for Mornachy Block B apartments and continue to hand over other eligible apartments.

In addition, the company also plans to repurchase 15% of the outstanding shares with the aim of reducing the number of outstanding shares and increasing value for shareholders. The capital for this repurchase plan will be taken from the surplus of equity capital and undistributed after-tax profits at the time of project implementation.

Profit increased nearly 5 times, interest pressure doubled, cash flow still negative by hundreds of billions of dong

In 2022, Nha Da Nang recorded net revenue of only 57 billion VND, after-tax profit recorded a negative 143 billion VND. In NDN's revenue structure, revenue from real estate decreased heavily, with a loss of 126 million VND.

Entering the first quarter of 2023, the company recorded a sudden increase in revenue to 215 billion VND while in the same period last year it only reached 144 million VND.

Financial revenue decreased from 23 billion VND to only 10 billion VND while financial expenses increased sharply from 7 billion VND to 14 billion VND.

The resumption of real estate sales has caused sales expenses to increase from just over VND16 million to over VND6 billion. Business management expenses did not fluctuate much, accounting for over VND1 billion.

Thanks to the sudden growth in revenue, the company's after-tax profit reached 106 billion VND, nearly 5 times higher than recorded in the same period last year.

However, another notable point is that despite recording hundreds of billions of VND in profit, on the cash flow report of Nha Da Nang, NDN's cash flow is still negative at 101 billion VND from business activities.

In the first quarter cash flow, revenue from sales and service provision only reached 36 billion VND, despite the company recording revenue of 215 billion VND and extraordinary profit of 106 billion VND. Meanwhile, the amount paid to partners providing services and goods amounted to 118 billion VND. This has caused the business cash flow of this unit to be heavily negative during the period. This means that the company is not earning enough to cover expenses in its own daily business activities.

Violations in equitization, 222 billion VND of NDN's assets were frozen at the Bank, cash and cash equivalents decreased by 50%.

Having difficulty with cash flow, Nha Da Nang has just announced information about resolving violations in the equitization process since 2010. In particular, the dossier determining the enterprise value for equitization in 2010 was not in accordance with the provisions of the law, causing heavy damage to the state budget.

Based on the investigation results of the Da Nang City Police Investigation Agency, the value of assets damaged to the state budget was used to serve the production and business activities of NDN after equitization. Therefore, the Da Nang City Police Investigation Agency issued an order to freeze the account with the amount of VND 222 billion of NDN at Viet A Bank - Da Nang Branch.

By the end of the first quarter of 2023, Danang House's total assets reached VND 1,398 billion, down 6.6% over the same period. Most of the company's assets are in the form of short-term financial investments with VND 741 billion. Recorded cash and cash equivalents decreased sharply by 50%, from more than VND 70 billion at the beginning of the period to only VND 34 billion.

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