After “What FIT did in 2017” article, Prof. Dr. Quach Manh Hao, FIT’s strategic advisor, continues to share with readers and investors the results of FIT’s business analysis. And through that, readers and investors will have an in-depth look at the current situation of the FIT.
Share of Prof. Dr. Quach Manh Hao:
I have just received a preliminary estimate from the accounting department for FIT Group’s business results until Q3 2017 and I think, though it is not final, investors and interested parties need to be updated.
Frankly, I have to start by saying that business results do not meet the plan. Specifically, the two important targets which are revenue and profit (after tax) reached 69% and 83% compared with the plan for the third quarter. Previously, sales performance in the first and second quarter was also 70% and 66% of the plan while profits reached 68% in the first quarter but there was sudden change as the second quarter reached 177% of the plan due to financial income growth. Cautiously, revenue performance is unlikely to reach the full year plan, yet the profit (only the interest of the group) can be achieved (97 billion VND, reaching 82% of the 119 billion VND plan).
However, I have no reason to worry about the efficiency of business operations by looking at gross profit margins and net profit margins, actual figures matched planned figures in the first, second and third quarters. Specifically, gross profit according to the plan is in the range of 23-24% of turnover, the figure of implementation is in the range of 23-25%, while net profit margin of 7-8% according to the plan, the actual figure is around 7%. Thus, I have seen that the bottom line of the business results above is the decline in revenue.
The most ominous thing is when we know the phenomenon but do not know why. Fortunately, in this case, the decline in revenue can be explained. It is the inevitable consequence of the tradeoff between early restructuring investments under the new business philosophy and trying to implement the year plan and maintain the old model. In the October update, I have listed important investments in the FIT business in 2017. New construction and upgrading of plants, investment and installation of new lines, restructuring of operations and products, etc. has led to factories not being able to keep up with the production plans, affecting the sales plans. In this respect, I think the Group may have made mistake in not regularly updating information about such changes to investors and shareholders. That is also why I want to offer another philosophy: shareholders need to know the earliest information, whether bad or good.
Strategic investment and restructuring are still ongoing. In my opinion, long-term value creation cannot be a job of a few months and it needs a short-term target tradeoff. It is difficult to talk about the future, but I can assert that there will be no effort of making nice report figures and good information. The present changes bring us to respect the integrity of the information and the right to know of the shareholders. As true information itself is good news. Fighting stock is absolutely absent in my strategic counseling. To avoid risk, you should only care when you know and trust, whatever company it is.
