Thien Long Ballpoint Pen (TLG) is preparing to issue ESOP shares at 82% lower than market price.

Thien Long Group (TLG) business is down but still issues bonus shares to employees

Thien Long Group Corporation (TLG code), a company famous for its Thien Long ballpoint pen brand, has just proposed a plan to issue 800,000 ESOP shares to employees. The number of additional shares issued is equivalent to 1.03% of the number of outstanding shares.

It is known that the price of ESOP shares will be 10,000 VND/share, 82% lower than the current market price of TLG shares. At the trading session on September 15, 2023, TLG shares are priced at 56,500 VND/share.

But Thien Long TLG is preparing to issue esop shares at a price lower than 82, image 1 — Thien Long ballpoint pen business in July went downhill, still issuing bonus shares to employees (Photo TL)

The bonus shares will be subject to transfer restrictions for 2 years from the closing date of the offering. After the completion of this offering, TLG's charter capital will increase from 778 billion to 786 billion VND.

Issuing bonus shares (ESOP) to employees in the company is a way to increase the relationship between the company and the employees. However, this plan took place in the context of TLG's declining business situation, causing many investors to question.

Profit in the first 7 months of the year went down, down 22%

Thien Long Group’s business results for the first 7 months of the year show a not-so-positive signal. Specifically, July’s revenue reached 230 billion VND, with after-tax profit only 9 billion VND.

Most of the expenses paid in July increased. Of which, the company's management and sales expenses increased by 16% compared to the same period. The reason explained by TLG is that the unit increased its sales expenses to develop its brand, preparing for the upcoming strong business period.

TLG's accumulated revenue in the first 7 months of the year reached 2,218 billion VND, a slight increase over the same period. Compared to the annual revenue plan, the company achieved 55% of the plan. Profit after tax was 277 billion VND, a decrease of 22% over the same period.

It can be seen that Thien Long Ballpoint Pen's business situation has been declining since the fourth quarter of 2022. Revenue in the fourth quarter of 2022 only reached 740.5 billion VND, profit after tax turned from profit to loss of 2.8 billion VND.

A series of expenses in the fourth quarter increased simultaneously, such as financial expenses increased 7.6 times to 19 billion VND. Sales expenses increased from 147.8 billion to 216.5 billion VND, equivalent to an increase of 46.5%. Business management expenses also increased 14.3% to 91.9 billion VND.

Q4/2022 is also the first time that TLG has to report a loss after 10 consecutive quarters of reporting profits. TLG's most recent loss was in Q1/2020 with a loss after tax of VND 19.9 billion. At the same time, this is the time when TLG's stock price hit bottom at VND 40,000/share.

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