Vietnam’s Elcom posts record revenue amid margin pressure

Elcom Technology Communications Corporation (HoSE: ELC) recorded its highest-ever revenue in 2025, though profit margins narrowed and financial pressure increased as it rolled out multiple large-scale infrastructure projects.

Record revenue, narrowing margins

In 2025, Elcom recorded revenue of VND1,517 billion ($58.41 million) - the highest since its establishment. This is the second time the company had surpassed the VND1,000 billion mark, the first being in 2016.

Compared to 2024, revenue rose by approximately 89.7%. However, net profit reached only VND128 billion ($4.93 million), up about 29% year-on-year.

Notably, net profit margin declined sharply. In 2024, despite revenue of just over VND800 billion ($30.8 million), Elcom achieved VND99 billion in after-tax profit, equivalent to a margin of around 12.4%. In 2025, the margin fell to about 8.5%.

The main reason was a sharp increase in cost of goods sold to approximately VND1,247 billion ($48.02 million), accounting for 82% of revenue, compared with 69.5% in 2024.

Elcom operates under a project-based model, primarily through competitive bidding. Profitability therefore depends heavily on the size, nature and competitiveness of each contract package, leading to fluctuations in margins from year to year. Analysts also noted that changes in revenue structure contributed to the narrower net margin.

Following the announcement of its sudden revenue surge, ELC shares climbed to VND26,800 ($1.03) on January 16, 2026. However, registrations by executives and related parties to sell a combined 1.5 million shares pushed the stock price back down to around VND23,000 per share on Friday.

Continuous bid wins, rising financial pressure

Elcom operates in software production, information technology transfer, and installation of high-tech systems and production lines.

In 2025, the company secured several intelligent transportation system (ITS) packages on the North-South Expressway, including the Van Ninh-Cam Lo section (VND145 billion or $5.58 million), the National Highway 45-Nghi Son section (VND99 billion), and the Long Thanh International Airport management system project (VND1,938 billion as a consortium sub-contractor).

Benefiting from accelerated public investment, Elcom has rapidly expanded its scale. However, infrastructure projects typically require contractors to advance capital before receiving payment - either partially or in full - upon acceptance and handover.

By year-end, Elcom’s work-in-progress construction costs had surged to VND180 billion ($6.93 million), up sharply from VND50 billion a year earlier. This represents completed work yet to be certified for payment.

Cash flow pressure has driven bank borrowings significantly higher. At the beginning of 2025, outstanding debt stood at around VND36 billion, but by year-end it had risen to VND396 billion ($15.25 million).

Meanwhile, cumulative receivables from customers reached nearly VND770 billion ($29.65 million), of which about VND84 billion was classified as bad debts. On a positive note, the company maintained VND416 billion in cash and cash equivalents, indicating that liquidity remains under control.

Elcom is entering a phase of strong expansion driven by public investment, particularly in transport and digital infrastructure. However, revenue growth has been accompanied by narrowing margins and mounting capital pressure.

As the company continues to expand its project portfolio, effective cash flow management, cost control, and improved contract execution will be critical to ensuring the quality of growth in the coming years.