Though Hoang Anh Gia Lai JSC, whose HAG shares are traded on the Ho Chi Minh City Stock Exchange, reported a hefty profit last year, the auditor raised doubts over the firm’s capacity for constant operations.

Apart from incurring an accumulated loss of over VND3.34 trillion (US$142.4 million), the firm also violated some terms in bond and loan contracts, according to the auditor.

Its 2022 audited financial statement showed that HAG, whose chairman is Doan Nguyen Duc, earned some VND5.9 trillion ($251.6 million) in revenue, up 2.5-fold year on year.

Fruit and pig sales significantly contributed to the high revenue.

The cost of goods sold accounted for a staggering 75 percent of the firm’s revenue, so its gross profit reached a mere VND1.17 trillion ($50 million).

Notably, finance charges remained its main burden, making up over VND1.64 trillion ($70 million), well above its gross profit.

Despite those, Hoang Anh Gia Lai posted over VND1.1 trillion ($47 million) in after-tax net profit last year, soaring nine-fold year on year, supported by provision reversal of over VND1.51 trillion ($64.4 million).

As of the end of 2022, HAG’s loan debt had inched down compared to the year-ago period, but the figure remained huge.

Specifically, the firm racked up more than VND14.6 trillion ($622.5 million) in debt, triple its equity and representing more than 73 percent of its total assets.

Aside from bank loans, Hoang Anh Gia Lai has issued bonds worth nearly VND5.74 trillion ($244.8 million). The firm is expected to settle mature bonds worth more than VND2.05 trillion ($87.4 million).

Auditing service supplier Ernst & Young Vietnam said that on the final day of 2022, HAG sustained cumulative losses of over VND3.34 trillion ($142.4 million), with its short-term debt exceeding its short-term asset at more than VND1.17 trillion (nearly $50 million).

Moreover, HAG violated several commitments to loan and bond contracts.

In late 2022, the firm failed to make the loan payment of VND279 billion ($11.9 million), as committed in a borrowing agreement with Eximbank.

Besides, the firm was set to pay over VND114 billion ($4.9 million) for bond principal and interest in late October 2022, but it was not until more than one week later that the company completed the settlement and paid a fine of over VND450 million ($19,190) for the late payment.

“These factors cast doubt on the firm’s ability to operate constantly,” said Ernst & Young Vietnam.

“In 2023, the sales of fruits and pigs will continue to hold the lion’s share of the firm’s revenue,” Vo Truong Son, general director of Hoang Anh Gia Lai, told the State Securities Commission of Vietnam and the Ho Chi Minh City Stock Exchange.

This year, the firm looks to get cash flows from liquidating financial investments and collecting debt from its partners, and from earnings from operational projects.

HAG is working with some lenders to discuss the adjustment of some terms in borrowing agreements.

“As such, the firm might pay off its debt and maintain its business and production operations,” said the HAG representative.

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