Businesses record billions of dollars in idle money

According to the 2024 financial report, many enterprises listed on the stock market (TTCK), excluding the banking industry, are holding a huge amount of cash and deposits.

A surprise appeared, the market recognized a new "cash king". After many years at the top, PetroVietnam Gas Corporation - PV GAS (GAS) "fell in rank", replaced by Vingroup Corporation (VIC) of billionaire Pham Nhat Vuong.

In 2024, Vingroup recorded a surge in cash and cash equivalents and short-term financial investments from nearly VND34 trillion at the end of 2023 to nearly VND49 trillion (about USD1.9 billion). This is considered a rare breakthrough, thereby pushing the gas industry giant PV GAS down after many years of dominating this position.

Another real estate giant in billionaire Pham Nhat Vuong's ecosystem, Vinhomes (VHM), also recorded a rapid increase in cash, doubling to more than 32 trillion VND.

In second place is still the familiar name Binh Son Refining and Petrochemical (BSR), this giant recorded a strong increase of 13%, to more than 43 trillion VND.

Some other big names recorded abundant cash and are often in the top 10, including: FPT Group (31 trillion VND), Hoa Phat Group HPG (nearly 26 trillion VND), Mobile World MWG (24.6 trillion VND), Vietnam Airports Corporation ACV (26.5 trillion VND), VEAM, Duc Giang Chemicals, Vinamilk, Sabeco (SAB), Masan (MSN), PNJ, BVH...

Among them, many businesses recorded a sharp increase in idle money. FPT recorded an increase of nearly 28% compared to the end of 2023. MWG increased by 16%...

On the other hand, in addition to PV GAS, HPG recorded a decrease of nearly 25% due to pouring money into expanding production with the Dung Quat 2 mega project. ACV also had a decreasing trend...

The accumulation of a large amount of idle cash may reflect good business performance and strong cash flow during the year, but it may also reflect two strategies. One is that businesses are being cautious in the face of economic fluctuations. Or, businesses are preparing resources to take advantage of large investment opportunities in the future.

Vingroup, MWG, FPT recorded better cash flow last year, while HPG, ACV are focusing on major projects (Dung Quat and Long Thanh airport)... ACV recorded idle money decreasing from 28.8 trillion VND at the end of 2023 to 26.5 trillion VND at the end of 2024.

Having a lot of money, good or bad?

Assessing the amount of idle cash is relative because it depends on the size of the enterprise. Abundant cash helps enterprises be more proactive in investing, paying debts and dealing with market risks, such as the case of Hoa Phat Group overcoming difficulties in 2022-2023, or Vinhomes being able to implement real estate projects even when the real estate market is difficult... HPG and ACV have plenty of money to help ensure large projects are being implemented.

Having cash on hand also helps businesses quickly seize business opportunities and increase financial credibility in the eyes of investors, partners and credit institutions...

However, holding too much money and not having a reasonable plan for using it can cause businesses to miss out on higher profit opportunities. Capital efficiency will also not be high. Idle money deposited in banks is often lower than borrowed money.

As in the case of VIC, out of 48 trillion, this group deposited 42 trillion in banks with many different terms, interest rates from 1.9% to 7.1%. The whole year, it earned thousands of billions of dong in interest.

In fact, most large corporations such as Vingroup, HPG, MWG… have very large loans. There are cases where bank deposits have problems, such as some deposits at banks that are subject to restructuring.

In addition, there may also be some cases of beautifying the cash balance by increasing short-term borrowing before the reporting period, transferring short-term investments, recording revenue before actual collection, selling assets and leasing back...

A large amount of cash may not completely reflect the financial health of a business. It also depends on the size of the business's assets, total debt, etc. The cash/total assets ratio of some businesses is high, such as: GAS, BSR, SAB, FPT, PNJ, MWG, REE. This ratio is low in some businesses such as: VIC, VHM, NVL, MSN, VRE, etc.

Many businesses have reduced cash but good prospects and vice versa. Some businesses have large cash resources to accelerate investment progress such as: HPG, VHM, BSR...

Cash is considered “king” at many times, but the most effective use is important. Accumulating a large amount of idle money is not always a positive thing. Many times, economic difficulties also cause businesses to delay expanding investment and business activities. However, good cash flow is what many businesses expect.

Vietnamese tycoons hold billions of dollars in cash, ready to pour into huge projects. Many businesses of Vietnamese tycoons hold a huge amount of cash, up to billions of dollars. Large cash flows are ready to pour into implementing ambitious projects.