What makes Fideco so attractive?

VietinBank Capital has just purchased 2.15 million FDC shares of Ho Chi Minh City Foreign Trade and Investment Development Joint Stock Company (Fideco), increasing its total holdings to 7 million shares, equivalent to 18.12% of FDC's shares.

VietinBank Capital, a limited liability company managing funds of Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank Capital), has just purchased 2.15 million FDC shares of Ho Chi Minh City Foreign Trade and Investment Development Joint Stock Company (Fideco), increasing its holdings to 7 million shares, equivalent to 18.12% of FDC's shares.

FDC shares are traded insignificantly daily due to concentrated ownership, so VietinBank Capital's purchase was a block trade that took place on November 20th. The recorded transaction value was VND 34.4 billion, equivalent to VND 16,000 per share, which is 1.38 times the book value per FDC share of VND 11,571/share.

VietinBank Capital officially became a major shareholder, owning over 5% of Fideco's capital after purchasing 3 million shares on October 17th through an agreed-upon transaction.

What makes FDC shares so attractive that institutional investors are increasing their holdings at a price 1.38 times their book value?

According to the Q3 2024 financial report, FDC has a charter capital of VND 386 billion, equity of VND 447 billion, and accumulated losses of approximately VND 200 billion.

After a slight loss in the second quarter, Fideco recorded a net profit of VND 2.425 billion and net revenue from service provision of nearly VND 7.2 billion in the third quarter. For the first nine months of the year, net revenue was VND 16.4 billion and net profit after tax was only VND 1.23 billion. In terms of business performance, Fideco is not particularly outstanding.

As a real estate business, Fideco's value is measured by its real estate projects and investments.

Fideco has a capital contribution of VND 280 billion under an investment cooperation contract signed on April 29, 2022, with Hung Vuong Ben Luc Joint Stock Company to develop a business project on land in Thanh Phu commune, Ben Luc district, Long An province. On April 10, 2023, the two parties signed an addendum extending the deadline for completing legal procedures for the project, planning, and construction to no later than June 30, 2025, and the contract implementation deadline to no later than December 31, 2026.

Fideco's investment projects are all facing legal issues.

Fideco owns invested real estate assets including a building on the land plot at 55 Mac Dinh Chi Street, adjacent to the company headquarters at 28 Phung Khac Khoan Street, Ho Chi Minh City, and the Fideco office building at 28 Phung Khac Khoan Street, valued at over VND 160 billion, with a remaining depreciation value of VND 159.773 billion. The building has been leased since Q3 2024, generating a profit of VND 1.5 billion, higher than the same period last year. Income from leasing investment properties totaled VND 16.3 billion.

Fideco Real Estate Investment

Fideco has invested a total of 266 billion VND in the Can Gio residential area project and the Binh Trung Dong residential area project, but both are currently facing legal issues.

Therefore, if we only look at Fideco's liquid asset, the building at 28 Phung Khac Khoan, we can see that the value of FDC shares does not depend on the building's exploitation but rather on its value in the event of a transfer.

Previously, Fideco transferred Fideco Tower on Ham Nghi Street for 170 billion VND to its subsidiary Fideco Land, then divested its stake in this subsidiary at a valuation of over 33,000 VND per share, generating 575 billion VND, equivalent to 27 million USD at the time of 2014.

According to Fideco's Q4 2013 financial report, the divestment from Fidecoland boosted profits from financial activities, reaching over VND 355.5 billion, with net profit for the quarter exceeding VND 226 billion.

That is why Fideco has a concentrated ownership stake and FDC shares have been almost illiquid on the HOSE exchange for a long time.

The participation and increased ownership stake of VietinBank Capital in FDC, an illiquid stock—where liquidity is a crucial criterion for investment decisions by institutions/funds—could indicate that Fideco is about to generate a sudden profit from the project transfer, similar to past events, or that a project currently facing legal obstacles is being resolved to qualify for implementation. However, financial investors speculate that this could also simply be a case of pledging shares as an investment, given that the transactions were primarily negotiated deals.

Source: https://baodautu.vn/fideco-co-gi-hap-dan-vietinbank-capital-d230858.html