Saigontel (SGT) 'indulged' in real estate leasing, only completed 5% of the yearly plan

Saigontel (SGT) revenue from core operations decreased by 50%

According to the consolidated financial statements for the first half of 2024, Saigontel recorded net revenue of VND360.8 billion, down 25% year-on-year. Gross profit therefore also decreased by 22.7% to VND78.9 billion, with a gross profit margin of 21.8%.

Notably, Saigontel's revenue structure recorded a significant decline in core business activities.

Specifically, revenue from trade and service activities in the field of providing telecommunications, internet, media services... only brought in 205.7 billion VND, down by half compared to the first 6 months of 2023. Meanwhile, revenue from real estate business, land, office and factory leasing increased from 65.5 billion to 155.2 billion VND, an increase of 136%.

Indulging in leasing land, offices and factories, Saigontel's (SGT) revenue has decreased, only completing 5% of the year's profit target. (Photo TL)

The imbalance in revenue shows that Saigontel is neglecting its core business of telecommunications and technology infrastructure, while the company is getting caught up in leasing land, offices and factories, which were not its strengths before.

Revenue has decreased but the costs to maintain Saigontel's operations have not been reduced, but even increased.

The most significant was financial expenses, which increased by 6 billion VND, accounting for 44.8 billion VND. Of which, interest expenses alone accounted for 39.4 billion VND. In return, financial revenue increased significantly, bringing in 46.2 billion VND with profits from investment trust activities during the period.

Sales expenses decreased to just over 753 million VND, but business management expenses increased by more than 6 billion, accounting for 49.6 billion VND. In addition, the company also had to bear other expenses of 13 billion VND.

As a result, Saigontel reported a pre-tax profit of VND21.8 billion and a post-tax profit of VND13.4 billion, down nearly 40% compared to the same period last year. Compared to the ambitious pre-tax profit target of VND450 billion, SGT has only completed less than 5% of the set target.

Debt burden continues to increase, negative cash flow of VND 229.8 billion

One of the costs that is putting the greatest pressure on Saigontel is financial costs. Most of which are interest costs from the thousands of billions of dong in debt that this unit has borrowed.

As of the end of the second quarter of 2024, SGT's total capital was recorded at VND 7,182.5 billion. Of which, 72.5% was payable debt, equivalent to VND 5,205.2 billion. Owner's equity accounted for only a small proportion of VND 1,977.3 billion.

SGT's short-term debt in the first 6 months of the year also increased by nearly VND200 billion, accounting for VND1,607.4 billion. Long-term debt increased by nearly VND50 billion, accounting for VND2,017.5 billion. SGT's total short-term and long-term debt currently accounts for VND3,624.9 billion, nearly double the current equity, showing a significant risk in the company's capital management activities.

In addition, the cash flow report also shows that in the first 6 months of the year, Saigontel had a negative cash flow of VND229.8 billion from business activities. This has forced the company to increase its debt and find sources of money to compensate for this shortage.

As a result, the company borrowed an additional VND852.1 billion while only paying the principal of VND595.5 billion. Cash flow from financial activities therefore increased by VND256.6 billion, all from borrowed money.

Which units is Saigontel 'in debt' to?

It can be seen that the debt of more than 3,624 billion VND is a prominent problem in Saigontel's operations. So which units is this company borrowing from?

The explanatory notes of the 2024 semi-annual consolidated financial statements show that Saigontel is borrowing short-term loans of VND 961.5 billion from related parties and VND 341.2 billion from banks.

Most notably, the loan of VND493.3 billion from Long An Development Investment Joint Stock Company and the loan of VND329.6 billion from Hung Yen Investment and Development Group Joint Stock Company.

For long-term loans, Saigontel is borrowing VND472 billion from related parties and borrowing up to VND1,502 billion from banks.

The most notable loan is VND 1,425.5 billion at a large bank. This loan is used to invest in the construction of technical infrastructure for Tan Phu 1 and Tan Phu 2 Industrial Clusters in Pho Yen town, Thai Nguyen province.

Source: https://www.congluan.vn/saigontel-sgt-sa-da-vao-cho-thue-bat-dong-san-moi-hoan-thanh-5-ke-hoach-nam-post312662.html