DSC Securities plans to issue 100 million new shares, parent company NTP Investment sells 70 million purchase rights unsuccessfully
NTP Investment JSC, the parent company of DSC Securities, registered to sell 70 million DSC stock purchase rights with the transaction period ending on June 21, 2023. However, NTP Investment was unable to complete the transaction due to not being able to reach an agreement on price with the transferee.
Previously, DSC Securities approved the plan to issue 100 million shares to existing shareholders at a price of VND 10,000/share. The issuance ratio is 1:1, corresponding to each shareholder owning 01 share will receive the right to buy 01 new share at a price of VND 10,000/share.
DSC Securities' Q1 profit dropped 20% mainly due to a 4.3-fold increase in interest expenses (Photo TL)
If the issuance is successful, DSC Securities will be able to double its charter capital to VND2,000 billion. The proceeds from the offering of approximately VND1,000 billion will be used by DSC Securities to supplement VND490 billion for margin lending activities; VND495 billion will be used to supplement capital for proprietary investment activities and the remaining amount will be used to supplement capital for other business activities of the company.
According to market records, in the trading session on June 27, 2023, the DSC code is being traded at VND 26,000/share. Thus, the issuance price of DSC is about 61.5% lower than the market.
Q1 revenue doubled but huge interest pressure caused profits to drop nearly 20%
Regarding the business situation of DSC Securities, in the context of many market fluctuations, DSC's Q1 business results showed strong revenue growth but after-tax profit declined.
Specifically, in the first quarter, the company's operating revenue reached 67 billion VND, nearly double that of the same period last year. Of which, the main revenue came from interest on loans and receivables, accounting for 30 billion VND. Revenue from securities brokerage also increased from more than 3 billion VND to 11 billion VND.
However, the increase in revenue caused securities brokerage costs to increase 5.5 times, from more than 3 billion VND to nearly 17 billion VND. Guarantee costs also doubled from more than 700 million VND to 1.5 billion VND.
More notably, the company's financial expenses also increased sharply from VND6 billion to VND26 billion. These are all interest expenses, showing that DSC is increasing its debt and the interest from these debts has increased by 4.3 times compared to the same period.
Sharp increase in interest expenses along with securities brokerage costs have put great pressure on revenue, causing DSC's after-tax profit to be only over VND11 billion, down nearly 20% compared to the same period last year.
DSC increased short-term debt by more than 438 billion in just 3 months, business cash flow was negative 435 billion
At the end of the first quarter of 2023, DSC Securities' total assets reached VND 2,857 billion, an increase of nearly VND 450 billion compared to the beginning of the year. However, DSC's increased asset structure mainly came from borrowed money.
Specifically, DSC's short-term borrowing and financial leasing debt increased abnormally in the first 3 months of the year, from 1,311 billion VND at the beginning of the period to 1,749 billion VND. This means that DSC had to borrow an additional 438 billion VND in short-term debt in the first quarter of 2023 alone.
The loan record during the period shows that DSC increased its loan from Vietnam Joint Stock Commercial Bank for Investment and Development from VND461 billion to VND745 billion; its loan from Vietnam Joint Stock Commercial Bank for Industry and Trade increased from VND50 billion to VND375 billion.
Another notable point is that the cash flow in DSC securities' business activities was recorded as negative VND 435 billion in the first quarter while it was positive VND 89 billion in the same period. This shows the severe cash flow deficit that DSC is facing. Therefore, it is not too difficult to understand why this unit had to increase its debt by VND 438 billion and currently the company's short-term debt has reached VND 1,749 billion, 1.6 times higher than the current equity.
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