QCG Q2 Net Profit Surges 25x on Hydropower Sale, Debt to Truong My Lan Lingers

Overview

Quốc Cường Gia Lai (QCG) reported a 25-fold year-on-year increase in Q2 net profit to over VND 165 billion, driven by a one-off gain from transferring hydropower plants. However, revenue plunged over 90% and core operations remained loss-making. The company still owes over VND 1,470 billion to Sunny Island, a Vạn Thịnh Phát affiliate, related to the Phước Kiển project dispute.

Key Facts

• Q2 net profit: over VND 165 billion, up 25x year-on-year.
• Q2 revenue: over VND 11 billion, down over 90% year-on-year.
• Core business loss: over VND 30 billion in Q2.
• One-off income: nearly VND 920 billion, including over VND 900 billion from hydropower plant sales.
• H1 revenue: over VND 80 billion, down 67% year-on-year.
• H1 pre-tax profit: nearly VND 230 billion, up 11x year-on-year.
• Total assets at June 30: nearly VND 7,940 billion, down about VND 800 billion from start of year.
• Debt to Sunny Island: over VND 1,470 billion (remaining after post-period payments).

What Happened

Quốc Cường Gia Lai (QCG) released its Q2 financial statements showing a dramatic profit surge, but the underlying business remains weak. Revenue fell to just over VND 11 billion, down more than 90% year-on-year, with nearly all coming from electricity sales and no real estate revenue. Selling expenses rose 53% to over VND 24 billion, pushing the core operating loss to over VND 30 billion. The profit was rescued by nearly VND 920 billion in other income, mostly from transferring hydropower plants, resulting in net profit of over VND 165 billion.

The company’s long-standing debt to Sunny Island, a company linked to Trương Mỹ Lan, remains a key issue. As of June 30, QCG still owed over VND 1,470 billion to Sunny Island, related to the Bắc Phước Kiển project. The debt originated from a 2017 agreement where Sunny Island paid over VND 2,880 billion for the project, but later breached payment obligations. QCG won an arbitration ruling in May 2023, but a court later annulled the ruling in December 2023.

Market Context

QCG shares closed at VND 9,960 on August 2, 2026, on the HOSE. The stock has been volatile amid ongoing legal disputes and weak fundamentals. The company’s core real estate business has struggled, with revenue declining sharply and a reliance on one-off gains. The broader Vietnamese real estate sector has faced headwinds, but QCG’s situation is compounded by its legal entanglements and related-party transactions.

Strategic Significance

For long-term investors, QCG’s Q2 results highlight the importance of distinguishing between one-off gains and sustainable earnings. The hydropower sale provides a cash boost but does not address the core issue: the lack of real estate revenue and the unresolved Phước Kiển project. The ongoing debt to Sunny Island and the legal dispute with Vạn Thịnh Phát could pose significant risks, potentially affecting asset values and cash flows. Investors should monitor the resolution of the arbitration and the company’s ability to restart its core business.

What to Watch

• Final court ruling on the arbitration annulment and its impact on the Sunny Island debt.
• Q3 earnings release to see if core operations improve or continue to decline.
• Progress on the Phước Kiển project and any new real estate sales.
• Any further asset sales or one-off gains that could mask underlying weakness.
• Changes in related-party loans and receivables, especially with the Loan family.