Agri major Loc Troi plans HoSE listing this year amid cash flow distress

Loc Troi Group JSC, one of the biggest agribusinesses in Vietnam, plans to list on the Ho Chi Minh Stock Exchange (HoSE) this year to counter a performance downturn and cash flow distress.

The plan has been added to documents to be considered at the firm’s 2024 AGM, slated for June 26 in the southern province of An Giang, at the request of its biggest shareholder, Singapore-based Marina Viet Pte. Ltd.

The firm, featuring on the Unlisted Public Company Market (UPCoM) as LTG since 2017, initially proposed a plan to list on the HoSE at its 2018 AGM. However, this plan was postponed until 2022, with an expected completion date no later than 2025.

Loc Troi Group executives attributed the delay to difficulties amid Covid-19. Its shareholders, including Marina Viet Pte. Ltd, held that a HoSE listing will enhance the firm’s reputation, transparency, and share liquidity.

Loc Troi is also facing cash flow challenges. During the early 2023-2024 winter-spring crop, the business signed contracts to purchase rice from farmers on over 50,000 hectares in the Mekong Delta region.

As of mid-April, it had secured over 300,000 tons of rice worth VND2.5 trillion ($98.16 million), but defaulted on VND472 billion ($18.53 million) in payments to the farmers. It was not until May 20 that the company completed these payments through cooperation with TPBank (HoSE: TPB).

The firm attributed its cash flow difficulties to surges in receivables and short-term debt, as well as a low profit margin. In the first quarter of 2024, its revenue soared 57% year-over-year to VND3.85 trillion ($151.12 million), including VND3.28 trillion ($129.02 million) from the food segment.

However, it incurred VND96 billion ($3.77 million) in net loss, up 19.7% year-on-year, and short-term payables doubled to VND2.07 trillion ($81.51 million) from early this year.

The company is undertaking a financial restructure and negotiating with financial partners and banks to find appropriate solutions. Loc Troi Group is near to securing a $90 million loan from the Dutch Entrepreneurial Development Bank (FMO), while seeking financing from both local and foreign banks.

This year, Loc Troi Group aims for earnings before interest, taxes, depreciation and amortization (EBITDA) of VND1 trillion ($39.26 million). It continues to promote rice export, aiming to introduce Vietnamese rice to European supermarkets such as Carrefour and E.Leclerc, and expand into the UK, U.S., and Canadian markets.

In the year to May 14, the enterprise had exported nearly 100,000 tons of rice valued at $63 million.

Last year, the company earned VND17 billion ($667,460) in profit, down 96% year-over-year. Meanwhile, in the 2021-2022 period, the firm's yearly earnings were above VND400 billion ($15.7 million).