STK Announces 10% Stock Dividend for 2025 Despite Q1/2026 Net Loss

Overview

Century Fiber JSC (STK) announced a 10% stock dividend for fiscal year 2025, issuing over 14 million shares. The dividend is funded from retained earnings as of December 31, 2025. However, the company reported a net loss of VND 34.4 billion in Q1/2026, a sharp reversal from a net profit of VND 35.6 billion in the same period last year, amid declining revenue and surging financial costs.

Key Facts

• STK plans to issue 14 million shares as a 10% stock dividend (1 new share for every 10 held).
• Total issuance value at par is VND 140 billion, sourced from retained earnings as of Dec 31, 2025.
• The dividend is for fiscal year 2025, with issuance expected in 2026 after SSC notification.
• Q1/2026 net revenue fell 28.7% year-on-year to VND 268.3 billion.
• Gross profit dropped 54.6% to VND 35.6 billion.
• Financial costs surged from VND 24.2 billion to VND 47.5 billion, a 96% increase.
• Net loss for Q1/2026 was VND 34.4 billion, versus a net profit of VND 35.6 billion in Q1/2025.
• Total assets stood at VND 4,131.8 billion as of March 31, 2026, with borrowings of VND 2,107.7 billion (87.5% of total liabilities).

What Happened

Century Fiber JSC (STK), listed on HoSE, approved a plan to issue over 14 million shares as a stock dividend for fiscal year 2025. Shareholders will receive one new share for every ten shares held. The shares are ordinary and not subject to transfer restrictions, but the dividend rights themselves are non-transferable. The issuance is expected to occur in 2026, pending a written notice from the State Securities Commission (SSC) confirming receipt of the filing documents.

Concurrently, STK reported a net loss of VND 34.4 billion for the first quarter of 2026, reversing a net profit of VND 35.6 billion in Q1/2025. Revenue declined 28.7% to VND 268.3 billion, while gross profit fell 54.6% to VND 35.6 billion. Financial costs nearly doubled to VND 47.5 billion, and administrative expenses rose 51.4% to VND 21.2 billion. The company’s total borrowings stood at VND 2,107.7 billion, representing 87.5% of total liabilities.

Market Context

STK shares closed at VND 12,650 on May 25, 2026, up 0.40% with low volume of 43,400 shares. The stock has faced pressure from the company’s deteriorating earnings, with the Q1/2026 loss marking a significant reversal. The textile sector in Vietnam has been challenged by weak global demand and rising input costs. STK’s high leverage (borrowings at 87.5% of liabilities) adds financial risk, especially as interest rates remain elevated.

Strategic Significance

The stock dividend signals management’s intent to reward shareholders despite the current loss, likely to maintain investor confidence. However, the dividend is funded from retained earnings, which may limit future capital for operations or debt reduction. The sharp increase in financial costs and administrative expenses suggests operational inefficiencies or higher interest burdens. The company’s ability to return to profitability will depend on revenue recovery and cost control, particularly given its high debt levels.

What to Watch

• Q2/2026 earnings release for signs of revenue stabilization or further deterioration.
• SSC approval timeline for the stock dividend issuance.
• Changes in borrowing levels and interest expense in upcoming quarters.
• Any strategic moves to reduce leverage or improve operational efficiency.
• Industry demand trends for textile products, especially export orders.