Profit after tax in the second quarter was 5 times higher than expected, showing a meaningful reform despite economic difficulties.
FIT is an enterprise operating in the field of financial services and investment eversince newly listed. However, in the past 5 years, FIT has changed drastically, developing in the model of a company-owned enterprise. The Group grew thanks to corporate acquisitions and added value thanks to the synergistic value from effective corporate governance of members. This model transformation is associated with a difficult restructuring process and a strong investment in senior management personnel and strategic advisors.
Model of a company-owned enterprise
“Just a few years ago, even now, when it came to FIT, many people used to think of it as a business primarily operating in the financial services and investment sectors. Few people discerned its first step of converting to the holdings company model since 2015 then undergone a strong restructuring of operations since 2017”, said the representative. shared by FIT.
FIT Group owns companies with high growth potential in developed industries.
Currently, FIT is the “parent company”, playing the role of capital management and controlling ownership of member companies operating in basic and essential industries such as: pharmaceuticals, medical supplies; food – beverage; cosmetics, real estate. FIT’s choice of industries to invest in is based on the philosophy of Vietnam’s long-term competitive advantage, which is population size and consumption potential.The business ownership model is not new in the world, yet the practical operation depends on the experience and ability of the owning company. In Vietnam, the role of corporate governance, especially in the relationship between the owner and the representative or parent-child company, has not been seriously studied. Therefore, if not closely followed and determined to restructure, the business ownership model will get bogged down in conventional financial investment.
Possessing well-experienced leadership team in human resource management, strategy building, operations management, finance and sales, FIT Group has taken the right step in choosing the right industries to invest in. according to its strengths. In just a short time, the group has basically completed the goal of building high-quality enterprises in such industries as: pharmaceuticals, pharmaceutical supplies, and medical supplies in the group of companies under the Joint Stock Company of Cuu Long Pharmaceutical (DCL), agriculture, food in Can Tho agriculture, westfood, beverage in Vikoda, real estate in FIT Land.According to a representative of FIT, one of the basic values of the company-owned enterprise model is the ability to take advantage of the synergistic value from saving the cost of sharing the administrative apparatus, as also at the same time reducing the operating costs in intermediate activity. The Group has been doing this well to bring more value to the member companies, thereby forming the common value of the group. It’s been a tough five-year process to now enter the stage of seeing the results.
First outcomes
2021 will probably be a pivotal year for FIT as once the restructuring process is completed, the economy will suddenly face difficulties due to the pandemic, affecting the general business activities of the group’s businesses. However, early business results show that the reform makes sense, even when the economy is still struggling.The group has just announced its second quarter business results, with a big spike in profit. Specifically, the profit after tax in the second quarter reached 149.2 billion VND, 5 times higher than the plan and in the first 6 months of the year, the profit after tax reached 163.6 billion VND, completing 93% of the target which set at 176.2 billion dong for the whole year. Profit after tax in the first 6 months of this year is also nearly double the profit after tax of the whole of 2020.
FIT’s net profit soars.
The surge in profit has a large contribution from the revenue of financial activities – which is a traditional business segment, while other business and consolidation activities have positive changes. The contribution of the parent company’s after-tax profit exceeded 47 billion, reaching 530% of the plan, while the consolidated TSC exceeded 105 billion and reached 673% of the plan, the consolidated DCL exceeded 8 billion, reaching 123% of the expected plan.The remarkable thing in the group’s first 6 months of operation compared to the previous year is that the corporate governance performance continued to be improved in a positive direction, in line with the philosophy of synergistic values towards which the corporation is aiming. While the gross profit margin reflecting the group’s relative competitive position was stable at 23%, the ratio of selling expenses to revenue was only 9.2%, lower than 12.7% of last year. Administrative expenses remained stable at approximately 10%.The improvement in corporate governance, including selling expenses is crucial since it shows the ability to generate better profits than in the past when business activities return to normal and operating revenue expanded. The indicators of gross profit and the proportion of administrative expenses reflect the competitive position of the business that is not affected by external factors, especially in the current pandemic situation and organizational stability of the enterprise after a long period of restructuring operations.
Billion dollar business ambition
Existing business results is expected to increase by more than 100% compared to the current figure for the last 4 quarters by FIT’s forecast EPS. This means that if market conditions remain to be positive in the second half of the year and stock valuations proceed at the current PE level, the company’s share price will improve accordingly.
FIT has donated over 13 billion VND to treatment facilities, isolation facilities … across the country after the 4th Covid-19 outbreak broke out.
The improvement in corporate performance was also recognized by the independent audit agency VACO when they recently gave a valuation of VND 10,000 billion in net asset value with the current charter capital of VND 2,500 billion. This price corresponds to a value of VND 40,000 per share. This value does not include the value of assets that have not been revalued at market prices such as alkaline water mines and the value of land owned by member companies.In comparison with the enterprise value from the first day of listing on the stock exchange in 2013, the valuation figures according to the current market and according to the valuation of VACO have changed dramatically. Nevertheless, that is incompleted goal. The development of the company ownership model with the firmly focus on optimizing corporate governance activities at member companies, the group is aiming for more ambitious goals than becoming the most valuable company in the world which worth a billion dollars in the next 5 years.
Social activities
Since the epidemic broke out on a large scale nationwide, FIT Group has launched and implemented the program “Isolation but not seperation” to accompany the health system in disease prevention and control. Accordingly, the group’s employees and member companies have directly supported medical facilities across the country, especially in difficult places, with necessary medical equipment and supplies for medical treatment services for the prevention and control of epidemics. In addition to the 3 billion VND Real-Time PCR automatic Covid-19 testing machine system awarded by Cuu Long DCL Pharmaceutical Joint Stock Company to Vinh Long City Medical Center, the products and supporting items are produced by member companies of the group. These items are very necessary and meaningful for the prevention of Covid-19.
Source: https://vnexpress.net/tap-doan-fit-kinh-doanh-hieu-qua-nho-tai-cau-truc-4335042.html
