The financial health of Chuong Duong Beverages Joint Stock Company (Saxi Chuong Duong) is on "red alert", with a string of losses spanning five consecutive years and no end in sight. The company aims for revenue nearly 1.5 times higher than last year, targeting 228 billion VND, but still anticipates a loss of 74 billion VND this year.
"With negative equity and a severe decline in operating cash flow due to continuous losses, the executive board assesses that the company will not have enough money to maintain operations until the end of this year," Chairman of the Board of Directors Tan Teck Chuan Lester wrote in the annual meeting documents.
According to the leadership, the domestic beverage market grows an average of 5-6% annually. Healthy, low-sugar or sugar-free drinks are the product categories benefiting most from changing consumer trends. However, the company currently lacks the capacity to develop these product lines.
The leadership notes that the Middle East conflict is increasing input costs, including raw materials and logistics. The gross profit margin for the beverage business is thus continuing to erode. Furthermore, limited cash flow makes debt payment difficult, which could lead to a surge in financial costs compared to previous years.
To address the cash shortage, Saxi Chuong Duong proposes transferring the Nhon Trach 3 factory and related assets (including the Saxi brand) to F&N Ventures for 93 billion VND. F&N Ventures is a subsidiary of F&N, a member of Thai Beverage's ecosystem, owned by Thai billionaire Charoen Sirivadhanabhakdi, established and listed on the Singapore stock exchange.
At an extraordinary meeting two months ago, the principle of transferring this factory was approved, but shareholders did not endorse F&N Ventures' initial offer of a minimum of 75 billion VND.
The Board of Directors previously stated that total losses of 350 billion VND over five years compel the company to make timely decisions to improve its financial capacity and cash flow autonomy. The company has set certain conditions for the buyer, including an immediate payment of 35% of the transfer value upon contract signing to allow the company to continue operations and avoid the risk of bankruptcy.
The leadership also stated that "after transferring the beverage segment, Saxi Chuong Duong could become a real estate company". The company will continue to operate its existing real estate properties in central TP HCM and Binh Duong (formerly), while also seeking future opportunities. The financial situation is expected to improve through this segment.
In the first Quarter, Saxi Chuong Duong generated 63 billion VND in revenue and incurred a loss of nearly 11 billion VND, an improvement compared to the same period last year. Total assets amounted to nearly 622 billion VND, while liabilities reached 790 billion VND, and equity stood at a negative 168 billion VND.
Phuong Dong
