Company with "golden land" plots incurs big losses
Halico, the owner of the famous Vodka Hanoi brand, has reported continued big losses for Q3 2020, despite its great advantages, including wide experience anf ownership of ‘golden’ land plots in advantageous positions.
The beverage company reported a decrease of 20 percent in revenue in Q3 compared with the same period last year to VND76 billion, and a loss of VND20.7 billion.
As of the end of September 2020, Halico had taken a loss of VND434 billion, much higher than the chartered capital of VND200 billion.
Like its big shareholder, Habeco, which is holding 54.29 percent of Halico shares, Halico is known as having a ‘120-year-old heritage’ in Vietnam. However, it has gone downhill since joining forces with the world’s big brewers nearly a decade ago.
Halico’s predecessor was the Hanoi Liquor Factory built by Fontaine, France in 1898. Until 2012, Halico had been making profit of around VND100 billion every year. But its revenue and profit began decreasing in 2013 and it has been taking loss since 2015.
In 2011-2012, Diageo, the world’s largest wine group, which ownd a lot of well-known brands including Johnnie Walker, Bailey and Smirnoff, through Streetcar Investment Holding Pte. Ltd, spent VND2 trillion to acquire 45.5 percent of Halico shares.
Halico’s capitalization value was estimated at VND4.3 trillion in accordance with the price paid by Diageo (the figure is VND240 billion now).
The presence of the world’s biggest liquor producer was expected to improve Halico’s business performance. However, contrary to predictions, Halico has been steadily taking a loss.
According to Halico, the company is facing difficulties because of changes in consumers’ taste and requirements. Halico has also had to struggle with tax-evading imports and counterfeits.
Halico took losses though it ownd a lot of land plots located in advantageous positions in Hanoi (Nhan Dong, Lo Duc and Linh Nam) and the land plot with the area of hundreds of thousands of square meters in Yen Phong and Bac Ninh was used to build alcohol production plant and wastewater treatment reservoir.
It also owns land in Da Nang and HCM City.
HNR, the shares of Halico, was put into transaction on UpCom on June 8, 2018 with the reference price of VND31,900 per share. HNR is priced at VND12,000 per share. There have been no order-matching transaction for a long time.
Halico’s decline began after the presence of the giant from the UK. However, many other reasons have also been cited, including internal conflict, a luxury tax increase and the Decree 100 on imposing heavy fines on drunk drivers.
The role of the big shareholders, Habeco and Diageo, has been lackluster. Diageo once brought an outsourcing contract, but it was terminated in 2017.
Many large corporations, valued at billions of dollars, do not intend to list their shares on the bourse.
Investors are concerned about the stock market performance, which has become unpredictable because of the pandemic.