Kido Group to sell extra 49% stake in Kido Frozen Foods for $95 mln

Vietnam’s Kido Group (HoSE: KDC) plans to sell an additional 49% stake in its frozen foods subsidiary, Kido Frozen Foods JSC (KDF), for about VND2.5 trillion dong ($94.97 million) in Q4, as the company struggles to meet profit targets for a fifth consecutive year.

Kido said the sale could generate a gross gain of roughly VND1.3 trillion ($49.4 million), based on the difference between the transfer price and the book value of the investment.

If completed within this quarter, the deal could help the company achieve its 2025 pre-tax profit target of VND800 billion ($30.4 million) - 7.6 times higher than last year’s results.

The group has fallen short of its annual profit goals for the past four years. The management said this year’s earnings target includes not only contributions from core businesses but also proceeds from investment and merger-and-acquisition activities.

Profit recovery driven by financial and associate income

In Q3, Kido reported consolidated revenue of VND2.43 trillion ($92.27 million), up 7.8% year-on-year, while gross profit rose 1.4% to VND472 billion ($17.93 million).

Despite strongly increased interest, selling and administrative expenses, pre-tax profit surged more than fourfold to VND73 billion and net profit tripled to VND66.7 billion ($2.53 million), thanks to a doubling in earnings from joint ventures and associates to VND88 billion, Gains from other activities were VND7 billion from the VND1 billion in the same period last year.

For the first nine months, Kido posted net revenue of VND6.59 trillion ($250.16 million), up 14%, and gross profit of VND1.2 trillion ($45.58 million), also up 14%. Pre-tax and post-tax profits reached VND157 billion and VND127 billion ($4.82 million), respectively, both more than doubling from a year earlier.

However, a breakdown of results shows that profits from core operations and financial income (VND1.4 trillion or $53.06 million) were insufficient to cover total financial, selling, and administrative expenses (VND1.45 trillion).

The edible oil segment, which contributed VND5 trillion ($190.1 million) in revenue and VND640 billion ($24.31 million) in gross profit, posted an operating loss due to VND674 billion in sales and administrative costs. Other product segments also incurred losses, while the confectionery business reported a modest profit of VND59 billion ($2.24 million).

Kido’s overall profitability was largely supported by financial income (VND38 billion or $1.44 million), other income (VND31 billion), and earnings from joint ventures and associates (VND174 billion).

At the end of the quarter, Kido Group had five joint ventures and associates (the group divested from Dabaco Food in Q2, recording a profit of nearly VND75 billion or $2.85 million).

Of these, Bac Binh Construction Investment Joint Stock Company, operating in the field of real estate business and leasing of factories and warehouses, is a newly added unit. This is the unit that owns and manages Van Hanh commercial center (Van Hanh Mall).

The group spent VND880 billion to buy 11.1 million shares, equivalent to 40.05% of Bac Binh's capital; the profit generated was nearly VND11 billion ($417,970). Kido used 11.1 million Bac Binh shares as collateral for the group's loan.

The affiliate that brought the most profit to the group in the first nine months was Kido Frozen Foods JSC (KDF) with VND142 billion ($5.4 million), followed by LG Vina with VND22.5 billion and Tafoco with VND1.3 billion.

Selling an extra 49% of Kido Frozen Foods for $95 million

This year, Kido Group's leadership is still steadfast with the pre-tax profit target of VND800 billion ($30.4 million), 7.6 times higher than the 2024 target. After nine months, the group has achieved less than 20% of its full-year target.

Looking back, in the past five years, Kido Group's leadership set a target of VND800-900 billion in pre-tax profit, but the plan has been broken for four years.

Regarding this year's profit plan, the group's leaders said that it will not only come from the main business sector but also from the investment and M&A segments.

On October 15, the board of directors of Kido Group met and approved the policy of finding a partner to transfer 49% of Kido Frozen Foods's (KDF) equity capital owned by the group. The expected transfer price is VND2.5 trillion ($94.97 million).

If the transaction is completed in Q4, the group can record a gross profit of about VND1.3 trillion ($49.4 million) (based on the difference in transfer price and investment value, excluding related costs). This will be a special factor helping Kido complete the pre-tax profit plan of VND800 billion ($30.4 million) assigned by shareholders.

In 2023, the group sold a stake 24% at Kido Frozen Foods, bringing in a profit of over VND1.05 trillion ($40 million) recorded in financial revenue. However, this was not a smooth M&A deal.

Although the transaction was approved by the company's board of directors and implemented in 2023, at the beginning of this year, the board submitted but failed to receive shareholders' approval for the transaction to sell 24.03% of Kido Frozen Foods to Nutifood Investment Company Limited.

The decisions were made after the group had trademark disputes with Kido Frozen Foods and Dat Viet Media JSC related to the promotion of the Celeno ice cream brand. Since the extraordinary general meeting of shareholders in early 2025, the group has not made an official announcement on how to handle the transaction when shareholders do not approve.

On the Ho Chi Minh Stock Exchange, KDC shares closed Tuesday at VND53,500 ($2.03) apiece.