Balance of supplies may be a problem for Mobile World after seizing Tran Anh Digital World JSC (code: TAG), causing losses to the latter and killing interest in its stocks.
|TAG stocks have not been traded since late April. Photo: dantri.com.vn |
The Hanoi Stock Exchange (HNX) stated that from June 25, TAG stocks will be put on alert because of the corporation’s negative after-tax profit and the undistributed after-tax profit released in its financial report on March 31, 2018. This negative performance undermined interest in the stock, leading to little to no trading since late April.
|In fact, the liquidity of the TAG ticker has been extremely low for a long time and its price remained at VND38,000. |
Tran Anh’s financial report stated that in the 2017 fiscal year (April 1, 2017–March 31, 2018), its sale revenue reached VND3.53 trillion ($155.6 million), down nearly 14 per cent against 2016. In addition, Tran Anh’s expenses to source goods occupied up to 88 per cent of its net revenue, leading to the gross profit of VND416.4 billion ($18.3 million), down more than 19 per cent on-year.
Furthermore, while its revenue from financial operations was only VND1.6 billion ($70,484), its financial costs (mainly interest expenses) hit VND18.9 billion ($832,600). Combined with high administrative and selling expenses, Tran Anh’s net loss was nearly VND64.5 billion ($2.84 million) in 2017, while in 2016 the firm made a profit of VND23.6 billion ($1.04 million).
According to the company’s balance sheet, as of March 31, 2018, Tran Anh’s liabilities were VND976.2 billion ($43 million), up 7 per cent on-year. The sum included short-term debts of 99.8 per cent of the liabilities, equaling VND974.2 billion ($42.9 million), up 7.2 per cent on-year.
In August last year Mobile World announced the plan to seize Tran Anh and took the firm over in September.
However, with the extensive store network of Mobile World, including 1,065 thegioididong and 693 dienmay stores, taking over Tran Anh’s 35 stores may have created difficulties in supply management for Mobile World.
Tran Kinh Doanh, Mobile World’s general director and chairman of Tran Anh’s Board of Management, admitted that during the merger, Tran Anh’s stores were short on goods for a long time.
In addition, Mobile World’s leaders also stated that information about the merger with Tran Anh has affected customer demands, leading to reduced revenue and losses.