Billions of shares flood the market: Part 1

Following this year's shareholder meeting season, numerous companies are planning to issue large quantities of shares to pay dividends and raise capital, with values ​​reaching billions of USD. Leading the list are companies in banking, securities trading, and real estate.

17 billion shares of the bank were launched on the stock market.

Among the sectors listed on the stock exchange, the banking sector has seen the most active issuance of additional shares. To date, only 3 out of 27 listed banks have not yet announced their share issuance plans. In the banking sector alone, the number of shares issued in this round has reached 17.1 billion.

The bank with the highest number of shares issued is Techcombank (stock code: TCB, listed on HOSE) . According to the results of Techcombank's shareholders' meeting, the plan to double its capital (from over VND 35,225 billion to over VND 70,450 billion) through the issuance of shares from equity capital was approved. Accordingly, Techcombank will issue an additional 3.5 billion shares.

A group of banks simultaneously issued shares (Illustrative image: ST)

Three banks in the BIG4 group (the four largest banks in the Vietnamese market) also plan to issue billions of shares. Specifically, VietinBank (stock code: CTG, HOSE) will not issue shares to increase capital but will use all of its 2023 profits after allocating funds to pay dividends in shares. It is estimated that CTG will issue an additional 2.5 billion shares, increasing its charter capital from VND 53,700 billion to VND 79,148 billion.

Similarly, Vietcombank (stock code: VCB, HOSE) also announced a plan to use all remaining profits after deducting reserves in 2023 to distribute stock dividends to shareholders. Accordingly, VCB will issue an additional 2.17 billion shares.

The General Meeting of Shareholders of the Bank for Investment and Development (BIDV, stock code: BID, HOSE) also approved the Board of Directors' proposed plan to increase charter capital by VND 13,600 billion in 2024 by issuing 1.36 billion shares through two methods: dividend payment and sale to professional securities investors.

In addition, the remaining 20 banks have also announced plans to issue millions of additional shares, such as: Military Bank (MBBank, ticker: MBB, HOSE) issuing 858 million shares (increasing capital by VND 8,580 billion), Lien Viet Post Bank (LPBank, ticker: LPB, HOSE) issuing 800 million shares (increasing capital by VND 8,000 billion), National Commercial Bank (NCB, ticker: NVB, HOSE) issuing 620 million shares (increasing capital by VND 6,200 billion)...

Securities companies are competing to raise capital.

Securities trading companies are also planning to increase capital through share issuance to boost funding. The 2024 Annual General Meeting of Shareholders of SSI Securities (stock code: SSI, HOSE) approved a plan to issue 453.2 million shares, including 302.2 million bonus shares and 151 million shares for shareholders. Thanks to this, SSI's charter capital is expected to increase to VND 19,645 billion (a 30% increase compared to the current capital).

LPBank Securities (LPBS) estimates it will issue an additional 363.8 million shares to increase its capital capacity as planned, a 15-fold increase compared to the current level (VND 250 billion), bringing the total to VND 3,888 billion.

Vietcap Securities (stock code: VCI, HOSE) also presented a plan to issue more than 281 million additional shares at its annual general meeting in April, increasing capital through the following methods: issuance to employees (ESOP), private placement, and additional issuance to existing shareholders. After completing these capital increase plans, VCI aims to bring its charter capital to over 7,000 billion VND (an increase of nearly 64% compared to the current level).

According to analysts, the increased demand for capital, even very high demand, in the financial sector (banking and securities) through stocks is primarily for expanding operations, gaining market share, improving margin lending capabilities, or proprietary trading.

Real estate companies raise capital through equity.

Besides the banking and securities sector, many other large companies have also announced plans to issue a large number of shares in the near future.

Novaland Investment Joint Stock Company (Novaland, stock code: NVL, HOSE) announced a plan to issue 1.2 billion shares at its 2024 annual general meeting, which was approved by shareholders in writing. The shares will be issued through a rights offering to existing shareholders.

Hoa Phat Group (stock code: HPG, HOSE) announced a stock bonus for shareholders at a rate of 10%, equivalent to 581.5 million newly issued shares, increasing its charter capital to VND 63,962 billion.

Real estate companies raise capital through stock offerings (Illustrative image: Internet)

Raising capital through stock issuance is considered a legitimate activity and a preferred solution for many businesses to expand operations, pay off debts, and invest, especially in the context of difficulties in raising capital through bonds.

A typical example is Phat Dat Real Estate Development Joint Stock Company (stock code: PDR, HOSE) . At the end of 2023, PDR completed a private placement of 67.16 million shares at a price of VND 10,000 per share. Thanks to this, the company successfully raised VND 671 billion, paying off all its bond debt by the end of 2023.

Recently, the company continued to apply this method to raise capital and received approval from the Securities Commission to offer 134.3 million shares to existing shareholders at a price of VND 10,000 per share. The expected amount to be raised is VND 1,343 billion, which will be used to invest in real estate projects.

In addition, many other businesses from the retail, education, service, and materials sectors have also announced the issuance of large numbers of shares this year.

However, many experts believe that a large influx of shares into the market is not necessarily a positive thing and could even put pressure on the market.

Furthermore, this also depends on whether the industry sectors are sufficiently active to generate profits for investors. An increase in the number of shares can also lead to increased share dilution, significantly impacting the rights of each existing shareholder.

DNSE Securities assesses that stock issuance has both positive and negative impacts, affecting shareholders and businesses. Investors need to be aware of these impacts in order to find appropriate and comprehensive solutions.

(To be continued)

Source: https://phunuvietnam.vn/hang-ty-co-phieu-do-bo-thi-truong-bai-1-ngan-hang-chung-khoan-bat-dong-san-dau-bang-20240520162715417.htm