Dong Anh profit rises as debt and cash flow weaken

That improvement came from stronger orders and better gross profit, which rose 68% to 136.8 billion dong. But the underlying financial strain did not ease: nine-month operating cash flow was negative 160.7 billion dong and interest-bearing debt climbed 317 billion dong from the start of the year to 1,262.2 billion dong.

For investors, the gap between earnings and cash flow matters more than the headline profit rise. Rising inventories, which reached 1,446.9 billion dong and accounted for 51% of total assets, absorbed 599 billion dong of cash in the first nine months and forced the company to lean on new borrowing to fund working capital.

That funding mix is becoming more expensive. Interest expense over the nine-month period rose 89.6% to 58.6 billion dong, while the company’s interest coverage weakened and gross margin slipped to 14.7% from 16.9% a year earlier.

The balance-sheet pressure is also visible in receivables and payables. Amounts due from EVN-linked units fell to 508.4 billion dong from 929.8 billion dong at the start of the year, while receivables from outside customers doubled to 345.6 billion dong, suggesting a broader customer base but also more credit exposure outside the utility group.

Dong Anh said it is actively pursuing new orders and expanding markets, and its nine-month revenue rose 30.1% to 2,073.6 billion dong. Even so, net profit for the period was 117.3 billion dong, slightly below last year’s 119.2 billion dong, underscoring how working-capital demands and debt costs are offsetting stronger sales.

With EVN still holding 46.49% and Gelex Power 46.90%, the company remains tied to Vietnam’s power-grid investment cycle. The next test is whether inventory can be turned into cash fast enough to reduce borrowing pressure, or whether continued expansion in grid demand will keep profit growth dependent on leverage rather than free cash flow.