LCM Stock Restricted by HNX After Auditor Issues Disclaimer on 2025 Financials

Overview

CTCP Khai thác và Chế biến Khoáng sản Lào Cai (LCM) has been placed under trading restrictions by the Hanoi Stock Exchange (HNX) after its auditor issued a disclaimer of opinion on the company’s 2025 financial statements. The auditor cited multiple material issues including unreported affiliate financials, questionable advances to employees, and an expired mining license, raising serious concerns about the company’s financial controls and ongoing viability.

Key Facts

• On April 7, 2026, HNX issued Decision 405/QĐ-SGDHN placing LCM stock under trading restrictions.
• The auditor could not obtain audited financial statements for two affiliates representing VND 47.9 billion in investments: VND 24.2 billion in Hợp tác xã Môi trường xanh Vân Sơn and VND 23.8 billion in CTCP Đầu tư và Xây dựng Môi trường Xanh Bình Thành.
• LCM reported VND 115 billion in advances to certain officers and employees, with the company claiming these were for business operations but providing no specific individuals or recovery timeline.
• The Hòa Bình gold mining project shows VND 6 billion in work-in-progress costs despite its mining license expiring long ago (originally issued November 12, 2009).
• LCM reported accumulated losses of nearly VND 136 billion as of 2025, representing 57% of equity, plus over VND 2 billion in overdue debt.
• The company has committed to recovering the VND 115 billion in advances and submitting affiliate financials in the next period, but provided no specific timelines.

What Happened

On April 7, 2026, the Hanoi Stock Exchange issued Decision 405/QĐ-SGDHN placing LCM stock under trading restrictions. This regulatory action followed the company’s auditor issuing a disclaimer of opinion on LCM’s 2025 financial statements, meaning the auditor could not form an opinion on whether the financials presented a true and fair view. According to the company’s explanation, the auditor cited three primary issues: unreported financial statements from two affiliates representing VND 47.9 billion in investments, VND 115 billion in advances to officers and employees without proper documentation, and VND 6 billion in costs for a gold mining project with an expired license.

In its response, LCM management acknowledged these issues but offered limited remediation specifics. The company stated it would recover the VND 115 billion in advances and submit affiliate financials in the next reporting period, but provided no concrete timeline. For the Hòa Bình gold project, LCM confirmed the mining license expired and stated it is working with authorities to renew it. The company emphasized it would maintain normal business operations to eventually exit the trading restriction status.

Market Context

LCM trades on the UPCoM exchange, Vietnam’s market for unlisted public companies, which typically features smaller, less liquid stocks with higher volatility. The trading restriction represents a significant regulatory escalation that will likely further reduce liquidity and investor confidence. The company has reported accumulated losses for multiple years, with the 2025 financials showing losses reaching VND 136 billion, or 57% of equity. This regulatory action compounds existing concerns about the company’s financial health and governance practices.

Strategic Significance

The auditor’s disclaimer and subsequent trading restrictions highlight fundamental weaknesses in LCM’s financial reporting, internal controls, and operational management. The inability to provide audited affiliate financials for substantial investments suggests poor oversight of related-party transactions. The VND 115 billion in undocumented employee advances raises questions about fund management and potential misuse of company resources. The expired mining license for a significant project indicates operational planning failures in a core business area. For long-term investors, these issues collectively undermine confidence in management’s ability to execute its mining strategy and maintain regulatory compliance.

What to Watch

• LCM’s submission of audited financial statements for the two affiliates representing VND 47.9 billion in investments.
• Recovery progress on the VND 115 billion in employee advances, including specific timelines and documentation.
• Renewal status of the Hòa Bình gold mining project license.
• The company’s next financial reporting period to assess whether governance improvements have been implemented.
• HNX’s decision timeline for potentially lifting the trading restrictions based on remediation progress.