Yarn maker Van Dat Group’s stock skyrockets after listing

Yarn and thread maker Van Dat Group JSC has seen its stock value soar over 104% since it began trading September 26 this year on the unlisted public companies market UPCoM as VDG.

After the starting price at VND11,000 ($0.44) per share, the stock hit its ceiling price (up 15%) for six consecutive sessions and rose 14.38% in one session to reach VND35,000 ($1.41) apiece.

Chairman Tran Van Anh said the stock's continuous rise in value was beyond the company's control. The leadership believed that the company was still operating normally and did not see any significant extraordinary factors affecting its operations. The stock price has been entirely determined by market factors, he said.

Van Dat Group, formerly Van Dat Architecture Group JSC, was established in 2019 with a charter capital of VND50 billion ($2.01 million under the current exchange rate), contributed by three individuals: chairman Tran Van Anh (90%), Chieng Quoc Kim (5%) and Le Viet Minh Phap (5%).

At the time of listing, the company's capital remained at VND50 billion, but the chairman reduced his ownership to 61% and Lai A Chanh became another major shareholder with 27.3%.

The company used VND15.4 billion ($620,000) to acquire the land use rights for the B07 Jamona Home Resort plot in Hiep Binh Phuoc ward, Thu Duc city, Ho Chi Minh City; VND20 billion to pay off loans; VND9.8 billion for purchasing goods; VND3.6 billion for transportation equipment; and added VND200 million to its working capital.

After nearly five years of operation, the company's total assets value increased to VND71 billion ($2.86 million), including fixed assets of VND18.2 billion, inventory of VND21.5 billion, and receivables of nearly VND23 billion. The company has no loans, with the largest payable being VND12 billion to suppliers.

In the first two years (2019-2020), the company intended to form joint ventures and develop small- to medium-sized real estate projects. However, due to difficulties in project development and obtaining permits, it could only earn revenue from the trading of building materials.

In 2021, with real estate remaining a challenging venture, the company expanded its operations into retailing fabric, wool, yarn, and textile products, renaming itself as Van Dat Group JSC.

Thereafter, its revenue surged from VND42 billion in 2021 to VND164 billion ($6.6 million) in 2022 and then to VND213 billion ($8.57 million) in 2023.

However, its net profit fell by VND391 million ($15,730), VND3.2 billion ($128,730) and VND2.6 billion respectively. In the first half of this year, the company's revenue rose 35% to VND110.4 billion ($4.44 million), but profit decreased 19% to VND1 billion ($40,230) due to reduced gross margins.

This year, Van Dat aims for a 10.3% revenue gain to VND235 billion ($9.46 million) and a 9% increase in net profit to VND2.8 billion ($112,670). After the first half, it had achieved 47% and 35.7% of its yearly revenue and profit targets.

By the end of Q2/2024, the firm had accumulated over VND5.9 billion ($237,425) in undistributed net profits. As it is still in the expansion phase, it has not yet paid any dividend to shareholders.

The leadership expects that with Vietnam's economy continuing to recover in the second half of the year, orders will pick up at the year-end, improving gross profit margins.

They say that Van Dat has entered a stable operational phase in the yarn and thread business, initially establishing credibility in the market with traditional customers and stable suppliers.

They also say that from yarn, the group plans to expand into full-fledged fabric production by taking over Van Dat Textile Material Company Limited, in which it has a 16% stake at present.

This associate, which has a charter capital of VND10 billion ($402,290), specializes in producing non-woven, environmentally-friendly fabric bags.

So far, the group has spent VND1.6 billion ($64,370) in acquiring the 16% stake. Now, it is making provisions for further investment in the associate because the latter has suffered cumulative losses and its revenue has fall short of expectations.