Vietnam agricultural machinery firm VEAM plans 50.35% dividend payout for 2023

State-controlled Vietnam Engine and Agricultural Machinery Corporation (VEAM) has announced its 2023 dividend payout plan – a cash dividend rate of 50.35%, equivalent to VND5,035 ($0.2) per share.

The deadline for dividend registration is November 20 and payment will be made on December 20.

With more than 1.3 billion floating shares, VEAM, registered on the Unlisted Public Companies Market (UPCoM) as VEA, will disburse a total of VND6.69 trillion ($263.5 million) in dividend for 2023.

The largest shareholder, the Ministry of Industry and Trade, will receive an estimated VND5.92 trillion for its 88.47% stake.

At present, VEA shares are trading at VND46,100 ($1.82) per share, marking a 10% increase from the beginning of August but still below the peak of VND49,200 seen in mid-June.

Big dividend payout, cash reserves

VEAM has been highly valued for the substantial dividend it pays, often ranging from 40% to 50% of its annual profit, supported by abundant cash reserves and strong profit-sharing from its joint ventures with Honda Vietnam, Toyota Vietnam and Ford Vietnam.

In the first nine months of 2024, VEAM reported a modest increase in revenue to VND2.97 trillion ($117 million) and contributions from joint ventures and affiliates amounting to VND4.36 trillion ($171.7 million).

In addition, thanks to sizable bank deposits, the company earned nearly VND650 billion in financial revenue, although this marked a 27% decrease year-on-year due to falling interest rates.

The company's after-tax profit for the period reached VND4.92 trillion ($193.7 million), slightly up from the VND4.72 trillion posted in the same period last year. By the end of Q3, VEAM had VND19.47 trillion ($766.84 million) in bank deposits, which made up 61% of its total assets.

Delayed stock listing

Despite these financial strengths, VEAM's audit statements have faced some qualified audit opinions, leading to the company's continued inability to list its shares on the stock exchange.

At the 2024 AGM, chairman Nguyen Khac Hai acknowledged that the company's stock has yet to be listed due to ongoing qualified audit opinions. These issues, many of which stem from previous years, require time to address in compliance with regulations.

In 2023, VEAM made provisions of VND600 billion ($23.63 million) for doubtful debts related to capital support for subsidiaries, thereby resolving one-quarter of the qualified audit opinions.

However, the most recent reviewed financial statements for the first half of 2024, prepared by UHY Audit and Consulting Co., highlight three main problems. Specifically, a receivable of VND45.9 billion that is overdue has not been assessed for recovery; the net realizable value of slow-moving inventory at the corporate office amounts to VND71.8 billion; and several unprocessed expenses, totaling VND466.1 billion, remain unresolved.

The audit report has flagged several ongoing issues with VEAM's investment projects, including an unresolved investment project for a medium-duty tractor manufacturing plant. The cost of infrastructure construction for the project may change depending on future decisions by regulatory authorities.

Another project involving the relocation and construction of a small tractor manufacturing plant, approved in 2014, and scheduled to be implemented from the fourth quarter of 2016 to the first quarter of 2023, is still pending completion of procedures for an extension of the implementation timeline.

Furthermore, the regulator has not yet formally approved finalization of VEAM's equitization process, and its VND40 billion ($1.57 million) investment in Thai Binh Duong Financial Investment Joint Venture has not yet been recorded due to a lack of supporting documentation from the relevant parties.