VNG Corporation surpasses after purchasing Tiki's additional shares

By Phuong Anh - Sep 04, 2018 | 07:32 AM GMT+7

TheLEADERSpending over $5.1 million to buy Vietnamese online retailer Tiki's shares, VNG now holds a 29 per cent stake, eight per cent higher than that of the second shareholder

According to VNG Corporation (VNG)’s recent semi – annual financial report, the company continued to add over $5.1 million to buy Tiki’s shares in the first half of 2018, making total VNG’s investment exceed $21 million. That is its largest investment in affiliated company showed in its report.

Despite success in raising capital, Tiki has been struggling to gain profit because of higher operating cost in a competitive market.

In the last two years, Tiki has spent most of money invested by VNG in the past. According to data from VNG’s annual reports, Tiki lost a total of over $16 million for 2016 and 2017. Since being put into operation, the loss of Tiki reached nearly $26 million.

However, Tiki Trading, which is responsible for sales on e-commerce site, got revenue surpassing $43 million last year. In the last three years, Tiki revenue from e-commerce has grown about three times.

The consolidation of Tiki's business results is one reason for VNG's declining earning. In the first half of the year, VNG's sales remained the same as last year, reaching nearly $86 million but its after-tax-profit was less than half year over year.

According to Reuters in early last June, Tiki was preparing for its new Series D fundraising and it expected to receive $50 – 100 million. It also wants to get $50 million earliest by the end of this year or within the next 18 months through issuing additional shares.

Tiki’s loss story partly shows the general picture of highly competitive and fast-growing e-commerce sector which is not as same as conventional businesses.

Alibaba – backed Lazada lost about $43 million per year from 2015 to 2016. By the end of 2016, the accumulated loss of the e-commerce company had reached nearly $116 million.

Officially launched in August 2016, Shopee e-commerce platform lost $7 million right in 2016. Last year, its loss increased to $26 million, nearly twice as much as Tiki's.