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Setting up a provision of more than 200 billion for bad debts with Coteccons, Ricons Construction almost lost money in the fourth quarter of 2023

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Currently, Coteccons' outstanding debt with Ricons is recorded at more than 322 billion VND.

Ricons Construction Joint Stock Company (Ricons) has just announced the consolidated financial statements for the fourth quarter of 2023 with net revenue reaching 2,270 billion - down 25% over the same period. Minus the cost price, the Company earned a gross profit of 97 billion - 3 times higher than the same period, gross profit margin also increased from 1% to 4%.

During the period, due to recording a provision for bad debts of more than 213 billion VND, along with losses in affiliated companies of more than 44 billion VND, Ricons had a net loss of 8 billion VND (in the fourth quarter of 2022, the company profit was 4 billion VND).

The main object of provisioning is Coteccons Construction (CTD) with 227 billion VND - equivalent to provisioning for more than 70% of Coteccons' total debt.

Previously, on July 24, 2023, Ricons submitted an application to the Court requesting to open bankruptcy proceedings with Coteccons because it believed that Coteccons was unable to pay debts due to Ricons. Currently, Coteccons' outstanding debt with Ricons is recorded at more than 322 billion VND.

In contrast, Ricons also reversed project warranty provision costs, recording another profit of 23 billion. This is also the "savior" that helps Ricons still have a net profit of nearly 6 billion VND, despite a decrease of 44% over the same period.

Cumulatively for the whole year 2023, Ricons will achieve net revenue of nearly 7,575 billion and net profit of 79 billion, down 33% and 13% respectively compared to 2022. Compared to the full year plan, Ricons still exceeds revenue and target targets by 26%. 58% of profit after tax target.

As of December 31, 2023, Ricons' total assets reached more than VND 7,866 billion. Of which, short-term receivables are more than 4,137 billion VND, accounting for 53% of total assets. Provision for short-term bad debts also increased 13 times at the beginning of the year, to more than 250 billion VND.

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How does VinaCapital forecast Vietnam's economy this year, and what are foreign investors' views on the country's economic prospects?

VinaCapital's macroeconomic research department forecasts that Vietnam's GDP will grow by about 6 - 6.5% in 2024, thanks to the recovery of exports and industrial production. This will have a positive impact on people's income as well as positively affect economic growth. In the process of being a bridge between Vietnam and international investors, introducing attractive investment opportunities in Vietnam, we clearly understand the views of international investors towards Vietnam.

Specifically, they all pay great attention to the prospects of Vietnam's stock market in the coming years, thanks to economic - political - social stability, increased income and consumption. of a population of 100 million people, the ability to attract strong FDI capital when multinational corporations apply the China +1 strategy, and efforts to upgrade Vietnam's stock market to emerging market in 2-3 years next.

Photo: Economic forecast indicators for 2024 (according to the General Statistics Office, Bloomberg, VinaCapital).

More specifically, the growth drivers are positive profit growth and current attractive valuations. We forecast that the profits of businesses in VinaCapital's tracking stock portfolio (representing 95% of VN-Index's capitalization) will grow about 13% in 2024, quite attractive compared to other countries in the bloc. ASEAN as well as China and India (two traditionally high growth markets of Asia).

With the above profit growth rate, VN-Index's P/E will be about 10 times for 2024, about 26% lower than the valuation of ASEAN-5 countries (Singapore, Malaysia, Indonesia, Philippines). and Thailand).