VNG targets a loss after tax of 619 billion dong in 2021, most likely because ZaloPay e-wallet may lose nearly 1,600 billion dong?

VNG Joint Stock Company has just announced a revenue plan of VND 7,609 billion in 2021, an increase of more than 26%. Thus, VNG’s target revenue continues to reach new heights; Last year, this technology “unicorn” earned VND 6,024 billion, an increase of more than 16%.

In 2020, VND 4,773 billion in revenue comes from online game services, up 13%; VND 983 billion came from online advertising services, up 26%; revenue from other business segments reached VND 268 billion, up 51%. VNG’s revenue has increased 3.3 times since 2014, and has no intention of stopping.

VNG is looking to diversify its business, especially Payment, AI and Cloud to participate in the next wave of technology. More specifically, the company develops products with strengths Zalo and ZaloPay.

According to the announcement, the profit after tax for shareholders of the parent company is 4 billion dong; negative after-tax profit of about 619 billion dong in 2021.

This is not the first time VNG has set a big loss plan; Last year, the technology “unicorn” set an after-tax loss of 246 billion dong. But in fact, the company made a profit of 194 billion dong, the profit after tax of parent company shareholders reached 460 billion dong. The consolidated financial statements for 2020 show that the after-tax loss of non-controlling shareholders is VND 267 billion. This loss is due to accounting from Zion JSC (the operator of the ZaloPay e-wallet) which is 60% owned by VNG. Last year, Zion lost 667 billion dong.

It is likely that VNG’s after-tax loss plan is to calculate that Zion’s subsidiary may lose even more heavily when promoting investment. Based on published data, Zion’s planned loss may be about VND 1,557 billion.

According to VNG, the number of monthly active users of ZaloPay in 2020 is 4 times higher than the same period in 2019. The number of ZaloPay depositors in monthly Zalo chat increased 10 times in the last 6 months of the year.

Last year, Zalopay cooperated with strategic partners such as Lazada, Baemin, Tiki, Sendo, Circle K, Big C in many different fields (e-commerce, shopping, health, beauty…). This e-wallet cooperates with 269 new partners, among them are Google Play, GS 25, Sendo, Be.

Currently, Momo and ZaloPay are the two most powerful e-wallets to spend money to attract users without fear of big losses. In 2019, Momo’s loss amounted to VND 854 billion. We do not currently have 2020 figures for this unit.