While old projects still need large cash flows to complete, the group chaired by Mr. Tran Ba Duong plans to pour an average of VND22,730 billion per year into a new "game" full of financial risks.
Cash flow pressure is increasing.
On June 4, Chairman of Truong Hai Group ( THACO ) - Mr. Tran Ba Duong - continued to send a second letter to employees, partners and the public, related to the group's proposal to participate in the North-South high-speed railway super project worth 67 billion USD.
According to Mr. Tran Ba Duong, the project enterprise that THACO established will mobilize 20% of the counterpart capital - equivalent to 312,000 billion VND. Of which, THACO alone will manage about 159,120 billion VND within 7 years, meaning that on average each year it needs to arrange about 22,730 billion VND of investment capital.
In addition, the Chairman of THACO also announced the profit plan for the period 2025-2027 to convince the public and stakeholders about the financial capacity of the group. Specifically, THACO expects the group's profit to grow dramatically: from 3,228 billion VND in 2024 to 16,089 billion VND in 2027, which is nearly 5 times in just 3 years.
Inside THACO AUTO factory.
Analysts say that even if this “dream” profit scenario becomes a reality, the figure of 16,000 billion VND per year will not be enough to ensure enough cash flow for the current investment needs of the enterprise, not to mention capital for the high-speed railway project. The reason is that THACO is facing great financial pressure for a series of old unfinished projects.
In the message at the beginning of 2025, THACO Chairman Tran Ba Duong announced a plan to disburse internal investment of up to more than VND 24,000 billion for subsidiaries THACO AGRI, THACO INDUSTRIES, THADICO (Dai Quang Minh), THISO, THILOGI and THACO Chu Lai.
The fact that the total investment within the bloc far exceeds the expected profit figure and is higher than the capital of 22,730 billion VND needed for the high-speed railway project each year shows that the group's resources are currently "stretched".
In addition, the financial report that THACO sent to the Hanoi Stock Exchange also shows that THACO's debt/equity ratio has continuously remained above 2 times in recent years. This shows that THACO is still operating heavily on borrowed capital, while profits have not kept up with the speed of investment expansion.
Therefore, the ability of THACO to arrange a cash flow of VND22,730 billion per year to implement the North-South high-speed railway project is a big question mark.
What is the solution to the 'huge' profit scenario?
THACO's profit growth scenario for the 2025-2027 period also raises concerns about feasibility, as almost all subsidiaries are expected to skyrocket after only 3 years.
The most notable of these is THACO AGRI: from a modest profit of VND 3 billion in 2024, this agricultural company is expected to reach VND 2,631 billion in 2027 - an increase of 877 times in just 3 years.
THACO AGRI is also a name that has caused this group headaches for many years. Specifically, in 2024, this banana growing and pig farming enterprise only made a profit of 3 billion VND, although in the first 6 months of the year, the recorded profit after tax was 5 billion VND. This means that in the second half of 2024, THACO AGRI continued to lose money. Previously, the loss recorded by the company was even larger: in 2021, it lost 514 billion VND, in 2022, it lost 869 billion VND, and in 2023, it started to make a slight profit of 42 billion VND.
Chairman Tran Ba Duong's soaring expectations are also placed on THADICO (Dai Quang Minh) with the Sala urban area project (Thu Thiem, Ho Chi Minh City). This enterprise is expected to achieve VND4,545 billion in profit in 2027, an increase of nearly 19 times compared to 2024.
THADICO's project started in 2013 but has yet to be completed due to prolonged legal problems. THACO's Chairman hopes that the Government's issuance of Decree No. 91 dated April 24, 2025 will remove legal bottlenecks, helping the project continue to be implemented in the coming time and become the main financial support for this group.
Besides THACO AGRI and THADICO, other units such as THACO INDUSTRIES (industry), THILOGI (logistics), or THISO (retail) are also targeting 3-8 times growth in a short time.
In the context of a volatile general market, where purchasing power has not yet recovered clearly, and especially when core sectors such as THACO AGRI have not yet shown signs of sustainable positive cash flow, THACO's expectations for a leap in growth cannot help but make experts wonder.
Although THACO announced that it would invite investors to contribute capital to the project enterprise, reality shows that mobilizing private financial resources in the infrastructure sector - especially railway infrastructure - is not easy, especially when the capital recovery period can last for decades. Therefore, it is likely that THACO will still be the main bearer of cash flow. At that time, capital pressure will pile up on an ecosystem that is already struggling to invest in many sectors.
Source: https://vietnamnet.vn/thaco-truoc-bai-toan-kho-gan-23-000-ty-dong-moi-nam-de-lam-dsct-bac-nam-2408620.html
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