Illustrative image (Photo: VNA) Hanoi (VNS/VNA) - In the context of impressive growth of the stockmarket, many companies have flocked to issue shares to raise capital, but notall achieve the expected result.
The first half of 2021 witnessed positive movements of the Vietnamese stockmarket with significant liquidity. FiinGroup statistics show that in 2021,listed companies plan to increase their equity size by 3.8 percent, equivalentto 102.6 trillion VND (4.5 billion USD) through share issuance, a record sofar.
From the beginning of this year, they have successfully issued about 20.3trillion VND and are planning to issue more than 82.3 trillion VND in theyear-end period.
When companies announced their issuance plans, stocks in the banking andsecurities groups attracted great attention from investors, because theincrease in capital would help the bank ensure the capital adequacy ratio(CAR), helping securities companies increase their lending capacity, therebyquickly improving market share and profits.
Stocks of banks and securities companies have attracted strong cash flow andhave been the best growth industry groups since the beginning of the year.
Contrary to the success of securities and banks, some enterprises in otherfields have not yet witnessed positive results.
The Dat Xanh Group Joint Stock Company (DXG) recently announced a plan toprivately issue 200 million shares, accounting for 38.59 percent of the company'soutstanding shares.
The issue price is determined with a 20-percent discount of the average closingprice of DXG shares in the last 20 trading days before the time the Board ofDirectors decides the specific issue price.
The market price of DXG at the time of announcement was 28,000 VND per share,so the issue price would be at 22,000 VND per share.
Together with the private placement, Dat Xanh also plans to issue an ESOP of 7million shares at the price of zero Vietnamese dong.
As soon as the issuance plan was announced, DXG shares were sold strongly byinvestors and even fell to the floor price in two consecutive trading sessionsof June 8 and June 9. The market price of DXG at the end of the trading sessionon June 9 was only 24,100 VND per share.
Rang Dong Light Source and Vacuum Flask JSC (RAL) announced the plan to issue11 million shares to existing shareholders, equivalent to 91.1 percent ofoutstanding shares of the company, with an aim to build a factory in Hanoi’s HoaLac Hi-tech Park.
The issue price is determined to be 65 percent of the average price of 20consecutive trading sessions before Rang Dong's announcement date and not lessthan 110,000 VND per share.
At the time of announcement, RAL's market price was around 220,000-230,000 VND pershare, which means the issue price would range from 140,000-150,000 VND pershare.
An issue price of up to “three digits” as in Rang Dong's case can be considereda record high and this causes many obstacles for shareholders. If a shareholderhas the right to buy 1,000 shares, he will have to spend hundreds of millionsof dong and this is not a small number for many investors.
Although the issuance plan would help Rang Dong ensure financial resources tobuild a new factory, in the short term, many investors rushed to sell RALshares, causing RAL to drop by nearly 30,000 VND or 13.3 percent after only twotrading sessions.
Earlier in May, the Binh Thanh Import - Export Production & Trade JSC (GIL)stunned investors as it offered a plan to privately issue 16.8 million sharesto investors at a low price of 35,000 VND per share, while the market price ofGIL at that time was up to 80,000 VND per share.
After the plan, GIL prices on the stock market reversed with strong sellingvolume and the stock market price is now below 60,000 VND per share, a deepdecrease compared to the time before the plan.
The issuance plan for existing shareholders can sometimes pressure"small" shareholders because they will have to pay more money, whileit takes a long time for the business to prove its effectiveness from themobilised capital, except for some cases where the effectiveness can be seenimmediately such as securities and banking groups.
This is a big barrier since individual investors do not often stay persistentin accompanying businesses. Many investors often use high margin, so when thecompanies announce the issuance plan to existing shareholders, these investorsrush to sell shares because they face difficult financial arrangements in theshort term./.
The first half of 2021 witnessed positive movements of the Vietnamese stockmarket with significant liquidity. FiinGroup statistics show that in 2021,listed companies plan to increase their equity size by 3.8 percent, equivalentto 102.6 trillion VND (4.5 billion USD) through share issuance, a record sofar.
From the beginning of this year, they have successfully issued about 20.3trillion VND and are planning to issue more than 82.3 trillion VND in theyear-end period.
When companies announced their issuance plans, stocks in the banking andsecurities groups attracted great attention from investors, because theincrease in capital would help the bank ensure the capital adequacy ratio(CAR), helping securities companies increase their lending capacity, therebyquickly improving market share and profits.
Stocks of banks and securities companies have attracted strong cash flow andhave been the best growth industry groups since the beginning of the year.
Contrary to the success of securities and banks, some enterprises in otherfields have not yet witnessed positive results.
The Dat Xanh Group Joint Stock Company (DXG) recently announced a plan toprivately issue 200 million shares, accounting for 38.59 percent of the company'soutstanding shares.
The issue price is determined with a 20-percent discount of the average closingprice of DXG shares in the last 20 trading days before the time the Board ofDirectors decides the specific issue price.
The market price of DXG at the time of announcement was 28,000 VND per share,so the issue price would be at 22,000 VND per share.
Together with the private placement, Dat Xanh also plans to issue an ESOP of 7million shares at the price of zero Vietnamese dong.
As soon as the issuance plan was announced, DXG shares were sold strongly byinvestors and even fell to the floor price in two consecutive trading sessionsof June 8 and June 9. The market price of DXG at the end of the trading sessionon June 9 was only 24,100 VND per share.
Rang Dong Light Source and Vacuum Flask JSC (RAL) announced the plan to issue11 million shares to existing shareholders, equivalent to 91.1 percent ofoutstanding shares of the company, with an aim to build a factory in Hanoi’s HoaLac Hi-tech Park.
The issue price is determined to be 65 percent of the average price of 20consecutive trading sessions before Rang Dong's announcement date and not lessthan 110,000 VND per share.
At the time of announcement, RAL's market price was around 220,000-230,000 VND pershare, which means the issue price would range from 140,000-150,000 VND pershare.
An issue price of up to “three digits” as in Rang Dong's case can be considereda record high and this causes many obstacles for shareholders. If a shareholderhas the right to buy 1,000 shares, he will have to spend hundreds of millionsof dong and this is not a small number for many investors.
Although the issuance plan would help Rang Dong ensure financial resources tobuild a new factory, in the short term, many investors rushed to sell RALshares, causing RAL to drop by nearly 30,000 VND or 13.3 percent after only twotrading sessions.
Earlier in May, the Binh Thanh Import - Export Production & Trade JSC (GIL)stunned investors as it offered a plan to privately issue 16.8 million sharesto investors at a low price of 35,000 VND per share, while the market price ofGIL at that time was up to 80,000 VND per share.
After the plan, GIL prices on the stock market reversed with strong sellingvolume and the stock market price is now below 60,000 VND per share, a deepdecrease compared to the time before the plan.
The issuance plan for existing shareholders can sometimes pressure"small" shareholders because they will have to pay more money, whileit takes a long time for the business to prove its effectiveness from themobilised capital, except for some cases where the effectiveness can be seenimmediately such as securities and banking groups.
This is a big barrier since individual investors do not often stay persistentin accompanying businesses. Many investors often use high margin, so when thecompanies announce the issuance plan to existing shareholders, these investorsrush to sell shares because they face difficult financial arrangements in theshort term./.
VNA
