Vietnamese companies raise abundant proceeds from share offerings despite gloomy market

Though the local stock market is in a downturn, many large Vietnamese companies have been able to raise abundant proceeds by offering hundreds of millions of shares to shareholders.

The Vietnamese stock market has been trading gloomily for nearly five months, with trading sessions of over VND20,000 billion ($789 million) in value gradually disappearing and a higher number of sessions of VND11,000-13,000 billion ($513 million).

The average transaction per session from July-October was only about VND15,000-16,000 billion ($631.3 million), down about 25% compared to the average of the first half of the year.

The benchmark VN-Index of the Ho Chi Minh Stock Exchang has fluctuated in a downtrend, falling below the 1,200 point mark on August 5, 2024.

Currently, VN-Index is trading at 1,250 points, up only 9.7% compared to the beginning of the year and significantly lower than the 14% growth recorded in the middle of the year.

The stock market is deemed as a channel to mobilize medium and long-term capital for the economy and businesses. Therefore, a vibrant stock market is a favorable condition for businesses to mobilize capital.

However, in recent times, despite the decline in the price of stocks and gloomy cash flows, many businesses have raised trillions of billions of Vietnamese dong (VND1 trillion = $39.45 million) from share offerings.

This shows the solid internal strength of the businesses as well as investors’ confidence in the stock market.

SSI Securities (HoSE: SSI) recently announced that the leading broker had successfully distributed nearly 150 million shares in offerings to existing shareholders.

At the price of VND15,000 ($0.59) per share, the proceeds were VND2,267 billion ($89.44 million) for SSI bosltering activities related to investment in certificates of deposit and lending for margin trading. The offering was completed on November 21.

During the offering, SSI shares recorded a price decrease from VND28,000 ($1.1) per share in early October to VND24,500 (based on adjusted price) in the context of a gloomy market.

Compared with the highest price range in April, this stock price had decreased by 20%.

Another leading securities company, Vietcap Securities (HoSE: VCI) stated that it had distributed 143.63 million shares via private placements, of which 69.56 million units were bought by domestic investors and 74 million by foreign investors.

The firm mobilized VND4,021 billion ($158.6 million) from the offering at VND28,000 ($1.1) per share. The private placement shares will be restricted from transfer within one year, from the date of the offering completion (November 11).

The list of investors buying VCI shares via private placements included foreign investment funds such as PYN Elite Fund (21.5 million shares), Vietnam Enterprise Investments Limited (7.5 million), Amersham Industries Limited (6. 8 million), and DC Developing Markets (5 million).

Similar to SSI, the price of VCI shares declined recently. Compared to the year’s peak at the end of March, this stock had dropped nearly 20%.

Some smaller-scale businesses also successfully mobilized capital through primary stock offerings.

For example, Thai Nguyen International Hospital (HoSE: TNH) brought in VND152 billion ($6 million) through offering 15.2 million shares at VND10,000 apiece.

Hung Hau Agriculture Joint Stock Company (Hanoi Stock Exchange or HNX: SJ1) sold nearly 20 million out of 23.5 million shares issued to shareholders. At the price of VND13,000 a share, the proceeds were nearly VND260 billion ($10.26 million).

A “giant” of the port and shipping industry, Gemadept, chose October to implement a plan to issue 103 million shares to existing shareholders at the price of VND29,000 ($1.14).

The company wanted to mobilize VND3,000 billion ($118.36 million) to purchase fixed assets (VND2,213 billion), and repay bank debt and contribute capital to Nam Dinh Vu Port Joint Stock Company (VND558 billion).

The GMD stock had a very strong price increase from the range of VND36,000 a share at the end of 2022 to a peak of VND73,000 ($2.88) in May.

After that, the stock adjusted and is currently trading at VND64,700, much higher than the offering price of VND29,000 to shareholders in this issuance.

Huge capital needs

According to many experts, the market showed many signs that it had bottomed out in November when the VN-Index approached the 1,200 point threshold.

With many driving forces including a better macroeconomic situation, improved corporate profits, a low interest rate environment and the prospect of stock market status upgrading, the Vietnamese stock market shows its potential in the long term.

Large companies began implementing plans to increase capital according to the plans approved by the 2024 AGMs in mid-year.

A key industrial developer, Becamex IDC (HoSE: BCM), has just announced the launch of an auction of 300 million shares at a price not lower than VND50,000 ($1.97 million) a share through the HoSE in mid-November. The implementation time is the fourth quarter of 2024 and 2025.

With an expected total value of no less than VND15,000 billion ($591.8 million), the BCM stock auction will be a rare “blockbuster” auction on the HoSE in recent years.

Auction activities on the stock market have been quiet for many years after major deals related to Vinamilk, Sabeco, Rubber Group, and Binh Son Refinery and Petrochemical took place in the period 2017-2018.

A few notable deals in the past few years like the Ministry of Constructio’s divestment of Idico (HNX: IDC) and Petrolimex’s (HoSE: PLX) divestment of PGBank (the Unlisted Public Companies Markets or UPCom: PGB) were worth only less than VND3,000 billion ($118.36 million) each.

Becamex IDC mobilized capital to invest in projects implemented by the corporation, contribute capital to member units and restructure finances.

Specifically, the company will use VND2,800 billion ($110.47 million) to invest in the Cay Truong Industrial Park; VND3,500 billion for the Bau Bang Industrial Park expansion project; VND3,634 billion for contributing capital to the VSIP joint venture, Becamex Binh Phuoc Technical Infrastructure Development Joint Stock Company, Becamex Binh Dinh etc., and VND 5,000 billion for financial restructuring.

BCM shares, after falling to a three-year low of VND51,600 apiece, have recovered well since April to VND66,500 ($2.62) last Friday, or an increase of over 28% after nearly seven months.

In mid-October, DIC Corp announced the decision of its board of directors to prioritize public offerings of shares to existing shareholders before other issuances to keep up with the schedule of capital mobilization for business activities.

According to the resolution of its 2024 AGM, the enterprise planned to offer 200 million shares at VND15,000 to shareholders, with the goal of raising VND3,000 billion ($118.36 million) to pour into the Cap Saint Jacques (CSJ) complex project phase 1 and 2 and the Vi Thanh commercial and residential area project and to fulfill bond obligations DGH2124003.

YeaH1 Group is implementing a plan to offer 54.8 million shares, equivalent to 40% of the outstanding shares, to existing shareholders. If successful, the business would increase its charter capital from VND1,370 billion to more than VND1,900 billion ($74.96 million).

With the price of VND10,000 per share, the company wants to mobilize VND548 billion ($21.62 million). The implementation time is the third or fourth quarter of this year, upon State Securities Commission approval.

The company said its offering aims to improve capital capacity to make it commensurate with the current total asset value.