L35 remains under warning as 2025 financial statements receive multiple qualified opinions

L35 remains on the Hanoi Stock Exchange (HNX) watchlist after its 2025 audited financial statements received multiple audit qualifications. The company reported revenue of over VND 48 billion in 2025, down 29% year-on-year.

2025 performance: revenue down, losses continue

Cost of goods sold fell in line with revenue, reaching nearly VND 45 billion. As a result, gross profit was about VND 3.6 billion, slightly lower than the prior year. While administrative expenses were modestly reduced, L35 still recorded a net loss of about VND 1 billion, narrower than the loss of VND 1.5 billion in the same period last year.

This is the sixth consecutive year of losses since 2020. Cumulative losses exceed VND 30.7 billion, leaving equity at end-2025 at a little over VND 5 billion.

Key audit qualifications behind the HNX watchlist

The audited financial statements include five qualified opinions issued by the audit firm AASC, which contributed to L35’s continued watchlist status.

• Receivables and payables: AASC could not obtain sufficient documentation to reconcile and confirm accounts receivable (nearly VND 30.7 billion) and accounts payable (nearly VND 17.5 billion), so the accuracy of these balances could not be determined.
• Overdue receivables: L35 has overdue receivables with a principal balance of nearly VND 47 billion. Although more than VND 5 billion has been provisioned, AASC could not assess collectibility or the basis for allowances.
• Work in progress: AASC did not obtain sufficient evidence to confirm the existence and proper valuation of “work in progress” amounting to VND 68 billion.
• BIDV interest classification: L35 recorded cumulative interest expenses for 2023–2025 (about VND 31.6 billion) related to BIDV, Ninh Binh branch, into “other short-term receivables” rather than the income statement. If correctly accounted, 2025 financing costs would increase by more than VND 10 billion and net profit would be lower.
• Social insurance late-payment penalties: L35 did not recognize penalties for late payment of social insurance exceeding VND 8 billion. Among these, late-payment interest in 2025 was near VND 1 billion, which implies 2025 profit may be overstated.

Management explanations

L35 said unsettled receivables largely arose more than three years ago. The company stated that letters were sent to customers, but customers did not respond, so adjustments could not be made. For “work in progress,” some projects have been completed but await settlement, and the company said there is not enough basis to adjust the books.

Regarding BIDV interest and BHXH (social insurance) penalties, L35 stated that the bank had not provided confirmations, and the social insurance authority figures are estimates based on remaining principal. The two sides are reviewing, and the company has not recognized these items in the current period results.

2026 targets and planned spending

In materials for the 2026 annual general meeting (AGM), L35 set targets for 2026 net revenue of VND 60.3 billion, up 26% from 2025. The company targets pretax profit of VND 15 million.

For investments, L35 plans to allocate VND 500 million for basic construction and equipment purchases to support production.

Restructuring and operational plans for 2026

L35 said it will continue to follow the restructuring plan of its parent company, Vietnam Lapping Machinery Joint Stock Company (UPCoM: LLM). The company also plans to actively seek divestment of government stakes under applicable rules.

L35 proposed that the 2026 AGM authorize decisions to relocate production from 72E Hoang Diieu Street (Hoa Lu Ward) to outside the city, including investments for a new office and factory.

Operationally, the company aims to complete the handover of the Hoang Long cement project and Ha Tien cement by-products, and is prepared to begin repairs at the Ninh Binh DAP plant. L35 also emphasized continuing capital recovery efforts, developing financing solutions to meet cash flow needs, and honoring commitments to banks, tax authorities, and social insurance.

AGM schedule

The 2026 AGM is planned for the morning of April 24 at L35’s headquarters in 72E Hoang Dieu, Hoa Lu Ward, Ninh Binh.