FTSE EFT strikes off FLC Faros from investment portfolio

FTSE ETF will sell its shareholding in FLC Faros over the latter's dubious performance

Bao Viet Securities Company (BVSC) forecasts FTSE ETF will take FLC Faros (HSX: ROS) (specialised in construction and heavy engineering) off from its investment lists. Moreover, the fund also intends to sell two million ROS stocks.

Indeed, FLC Faros has not shined in recent years. According to the company’s consolidated financial report for the fourth quarter of 2019, FLC Faros only completed about 56 per cent of the year’s after-tax profit target, and the value of receivables makes up nearly half of its total assets.

Specifically, its net revenue in the fourth quarter reached VND1.326 trillion ($57.65 million), down 7 per cent on-year. A 12 per cent fall in the cost of goods sold boosted its accumulated profit by 52.8 per cent to VND172 billion ($7.5 million). However, due to a sudden spike in sales financial expenses, FLC Faros’ after-tax profit soared by only 10 per cent to VND101 billion ($4.4 million).

Operation cost burdens also had an impact on the company. Accordingly, its consolidated financial report in 2018 showed that payments for staff accounted for more than half of the total management expenses but the income of the leaders dropped sharply.

The earnings of the management board and general directors in 2018 were more than VND3.5 billion ($152.17 million), down nearly VND744 million ($32,350) against 2017. Meanwhile, surprisingly, staff expenses leapt to VND41.25 billion ($1.8 million) from VND608 million ($26,430), a 68-fold increase in the same year.

However, the staff’s unusual rise in income was completely contrary to FLC Faros' performance. Specifically, the company's after-tax profit in 2018 fell by 78.19 per cent to nearly VND185 billion ($8 million).

Explaining the huge downturn in profit, FLC Faros said that it has been carrying out many capital-intensive projects. “The projects are still underway and it is not yet time to release information on their performance according to the laws on audit.”

Notwithstanding, these figures raised many questions about the company’s operations.

In October 2019, FLC Faros was listed among the five companies with the heftiest social insurance debts by Hanoi Social Insurance. Accordingly, the firm’s insurance debt is VND6.724 billion ($292,350).

Additionally, the Ho Chi Minh City Stock Exchange figured out that FLC Faros, in September 14, 2016-March 6, 2019, received 31 requirements to pay VND116.5 billion ($5 million) of tax.