Many businesses unexpectedly reported losses of thousands of billions of dong.

In addition to the big companies that suddenly reported losses like Hoang Anh Gia Lai and Truong Thanh Wood, there are many businesses that have been "losing on top of losing" for many years in a row.

Truong Thanh Wood Industry Group (Stock code: TTF) announced its second quarter financial report with a loss of up to 1,123 billion VND, while the previous quarter had a profit of 54 billion. In the first 6 months, the company had a cumulative loss of 1,073 billion VND, while in the same period, it still had a profit of 133 billion VND.

According to the explanation of the auditing unit, Ernst & Young Vietnam Co., Ltd., the reason for the above loss was that the unit discovered that up to 980 billion VND of inventory had "evaporated" when counting in the cost of goods sold. The provision for bad debts and missing inventory caused the company to fall into heavy losses.

Notably, in addition to the large inventory, many doubts have been raised about this business due to its large debt. The debt ratio has increased to nearly 86%, eroding the company's equity. In the report's explanation, there are up to 11 banks lending this business a total of 1,024 billion VND. As of the end of June, the company's inventory decreased to 1,777 billion VND, and receivables also decreased by more than 218 billion VND. The company's revenue decreased by 34.5% to 883 billion VND. Total assets evaporated by more than 800 billion VND to 3,573 billion VND.

Truong Thanh Wood lost 1,073 billion VND in the first half of the year. Photo: TH.

Similarly, Hoang Anh Gia Lai Joint Stock Company (stock code: HAG), run by Chairman Doan Nguyen Duc, unexpectedly reported a loss of VND1,075 billion, while in the same period last year it made a profit of VND1,000 billion. This loss is said to be due to the liquidation of a real estate project in Ho Chi Minh City worth VND413 billion, the revaluation of ineffective assets worth VND530 billion, and losses due to large interest expenses.

HAG's total assets by the end of the second quarter reached VND51,175 billion, an increase of nearly VND2,000 billion compared to the beginning of the year. Debt currently accounts for 64.5% of the capital structure of this enterprise. Liabilities reached VND33,023 billion, a slight increase compared to the beginning of the year. Short-term debt increased by nearly VND2,000 billion, to VND10,212 billion. The reason is that many long-term loans are due for payment. BIDV is still HAGL's largest creditor, followed by Eximbank, HDBank (VND1,126 billion)...

In addition to the businesses that suddenly suffered huge losses, in the first half of this year, there were also many businesses that continued their streak of "huge" losses from previous years. A typical example is the Vietnam - Japan Medical Equipment Joint Stock Company (JVC), whose consolidated report for the first quarter of the 2016-2017 fiscal year (from April 1 to June 30, 2016) showed that revenue reached VND133 billion but profit was negative VND5 billion, extending the streak of losses after the incident of the company's leadership. Previously, in the 2015-2016 fiscal year ending March 31, the company only had net revenue of VND507 billion, down nearly half compared to the same period last year. Due to the sudden increase in cost of goods sold to nearly 504 billion, combined with strong arising expenses such as financial expenses increasing 6 times, business management expenses increasing 2 times before audit, JVC recorded a net loss of nearly 1,336 billion VND in 2015, 2 times higher than the unaudited figure.

Explaining the reason for the sharp increase in losses, according to the auditor, it was mainly due to JVC having to set aside a total of 1,125 billion in provisions for bad debts. Of which, the company guaranteed for 2 businesses related to members of the former Board of Directors and their relatives. These transactions have not been approved by the General Meeting of Shareholders. As a result, the company lost 594 billion VND for this guarantee and had to set aside corresponding provisions.

Although not recording a large loss like the above enterprises, Saigon - Quy Nhon Mineral Joint Stock Company (SQC) has been "losing on top of losing" for 3 consecutive years. The company's second quarter report shows that sales revenue in the quarter only reached 473 million VND, but the cost of goods sold was up to 7.1 billion, causing gross profit from sales and service provision to lose 6.6 billion VND and total profit from business activities to be negative 9.6 billion. In the first 6 months, the company achieved revenue of 87 billion VND, profit after tax was negative 39.8 billion VND. This is not the first loss of the company, because in the previous 3 years, the company continuously suffered losses. Due to declining business and consecutive losses for many years, SQC shares were delisted by the Hanoi Stock Exchange from May 19 and transferred to the UpCoM trading floor.

In addition to the above enterprises, the first half of this year also witnessed many other loss-reporting enterprises such asOcean Hotel and Service Joint Stock Company (OCH) - ma member of Ocean Group,also announced a loss of more than 94 billion VND, due to having to bear interest expenses of more than 82 billion VND and provision for securities trading price reduction of 17 billion VND.

Or Song Da 7 Joint Stock Company (SD7), in the second quarter recorded a negative profit after tax of 43 billion VND. Accumulated for 6 months, the company's profit after tax was negative 45.4 billion VND, the same period last year lost 3.2 billion. According to the explanation of this unit, the company's revenue in the second quarter decreased by 87% compared to the same period last year, at the same time, financial expenses arose by more than 55 billion VND from interest charges and investment provisions.

Assessing the above situation,Mr. Truong Duy Khiem, Director of Le Ngo Cat branch - ABCS Securities Company, said that in the past 5 years, there has never been a year with as many and large number of businesses making losses as in the first half of this year. This also shows that the health of businesses on the stock exchange is increasingly declining.

"In particular, businesses with continuous losses of over VND1,000 billion reflect poor business performance for many years and now, when they can no longer endure, they have "exploded". Therefore, investors should consider carefully when investing in these businesses," said Mr. Khiem.

According to VNE