Firms rebooting capital hike plans

Hoang Van Tang, CEO of Development Investment Construction JSC (DIG), unveiled that despite continual decreases in the stock price amidst unfavourable market conditions, the company is maintaining its plan to issue 100 million shares to existing shareholders at a proposed price of $6.50 apiece.

On February 28, the ticker was closed at around $5.90, falling about 80 per cent compared to its peak in January 2022.

In its initial plan, DIG envisaged selling 100 million shares at $13 each.

After the ticker price was pulled down following the general market trend, the company’s management decided on raising the sale volume to 150 million shares at approximately $8.70 apiece, before scaling the volume down to 100 million shares again with a price of $6.50 each.

The company aims to use the total proceeds approximating $65.2 million from stock issuance to feed its Long Tan urban resort project based in the southern province of Dong Nai.

Besides the sliding ticker price, DIG also saw less upbeat business results in 2022 as the company counted just $83 million in revenue and $8.5 million in pre-tax profit, equal to 38 per cent and 10 per cent of the full-year revenue and profit targets respectively.

“Another major challenge for DIG – as well as other real estate firms – at this time are the legal bottlenecks that cause projects to slow. Finalising procedures alone is very time-consuming, which leads to missed opportunities,” said Tang.

To fast-track their plans, many firms have considered lowering ticker prices, reducing stock volumes, or presenting feasible plans on capital usage to convince shareholders.

Meanwhile, Tuan Huynh, CEO of Cienco4 (C4G), said that in the third quarter last year, C4G temporarily postponed its stock issuance plan due to market factors.

Currently, the company has resumed its stock sale and is seeking State Securities Commission (SSC) approval to issue more than 112 million shares to existing shareholders at a 2:1 ratio with a value of $4.30 apiece.

If successful, C4G’s charter capital will reach $146.5 million from nearly $97.7 million currently.

“Capital supplementation is crucial at this point. The company will use part of the proceeds to pay for subcontractors and suppliers while simultaneously enriching our working capital,” said Huynh.

On March 10, Vietnam Container Shipping JSC (VSC) will present its plan to issue more than 121 million stocks to existing shareholders at a 1:1 ratio and a proposed face value of $4.30 apiece.

If successful, the company’s charter capital would be doubled to surpass $97.8 million.

VSC would use part of the proceeds to acquire a ruling stake in a seafood firm based in Haiphong, and the remainder to complement its capital sources.

Several other companies have postponed their capital hike proposals, including Lam Dong Pharmaceutical JSC and Thu Duc Housing JSC. They have also unveiled plans to resume the stock issuance process and submit them at the general shareholder meetings this year.

To fast-track their plans, many firms have considered lowering ticker prices, reducing stock volumes, or presenting feasible plans on capital usage to convince shareholders.

According to an SSC executive, the body welcomes businesses’ stock issuance plans after they transparently complete the necessary procedures.

“The legal documents have been relaxed, allowing firms to issue shares below the face value. More importantly, they need to present viable issuance and capital usage plans that are approved by their shareholders,” said the executive.

Securities firms are witnessing gloomy business results in the year to date due to unfavourable market developments.

Despite Electricity of Vietnam’s (EVN) intention to increase energy rates to rebalance its budget for 2023, the status of coal-fired power does not yet seem to be declining.

The recent cooling in the prices of some fundamental raw materials has alleviated pressure on construction companies, which are eager to restore their businesses with a slew of new contracts.