Profits drop sharply, cash flow is negative, Nam Long wants to borrow 950 billion to pay off debt

Borrow 950 billion VND in bonds to repay debt

Nam Long Investment Corporation (code NLG) has just announced a resolution of the Board of Directors approving the plan to issue two bond lots with a total maximum value of VND950 billion, both with a term of 36 months.

On May 22, 2024, Vietnam Report just announced the VIX50 Ranking - Top 50 reputable and effective public companies in 2024, including Nam Long Group. Source: TL

The amount raised is expected to be used to pay off the entire principal of the two bond lots issued by Nam Long in early September 2021, including bond lot NLGB2124001 and bond lot NLGB2124002, both with a term of 36 months.

Of which, with the maximum bond value of VND500 billion, Nam Long plans to issue in the third quarter of 2024. The interest rate for the first 4 months is 9.78%/year; the remaining periods will be a floating interest rate equal to the sum of 4.73%/year and the reference interest rate of the relevant interest calculation period.

The collateral for this bond lot includes 34 million shares of Nam Long Group at Southgate Joint Stock Company with a total value at the date of issuance of VND 1,000 billion, equivalent to VND 29,000/share.

In addition, Nam Long said that the collateral can be supplemented or replaced by the group's shares in Nam Long VCD Joint Stock Company and Waterfront City LLC, along with a number of other assets owned by the group.

With the bond lot worth a maximum of VND450 billion, Nam Long Group also plans to issue in the third quarter of 2024 with the same interest rate and collateral as the bond lot worth VND500 billion.

As of June 30, 2024, Nam Long is borrowing more than VND 6,500 billion in financial debt, an increase of more than VND 400 billion compared to the beginning of the year and accounting for nearly 22% of total assets. Outstanding bond debt is more than VND 3,600 billion, of which more than VND 1,600 billion will be due within the next 12 months.

By the end of the second quarter of 2024, Nam Long's total assets were VND 29,731 billion, up 4% compared to the beginning of the year. Of which, the value of inventory reached VND 19,165 billion, up 10%, mainly unfinished real estate in the projects: Izumi Project (VND 8,655 billion); Waterpoint Project Phase 1 (VND 3,837 billion); Akari Project (VND 2,425 billion); Waterpoint Project Phase 2 (VND 2,036 billion)...

Profits plummet, negative business cash flow

Nam Long wants to borrow bonds to refinance debt in the context of the real estate company's unfavorable business situation. In the second quarter of 2024, Nam Long recorded net revenue of VND 252 billion and after-tax profit of VND 160 billion, down 73.5% and 31% respectively compared to the same period last year.

Notably, profits mainly came from financial activities. During the period, financial revenue increased more than 5 times compared to the same period in 2023, reaching VND 250 billion, mainly thanks to revenue of VND 231 billion from the transfer of 25% of shares in the subsidiary - Paragon Dai Phuoc Company to strategic partner Nishi Nippon Railroad (Japan).

The transfer deal is worth VND662 billion, estimated to bring in an after-tax profit of about VND200 billion. Nam Long's ownership ratio in this project has decreased from 75% to 50%. Paragon Dai Phuoc is the investor of the project of the same name, with a scale of more than 45 hectares in the Dai Phuoc Eco -tourism Urban Area with a total scale of 464 hectares in Nhon Trach district, Dong Nai province.

In the first 6 months of the year, Nam Long recorded VND457 billion in revenue and VND94.8 billion in profit after tax, down 61.5% and 62% respectively compared to the same period last year. With the achieved results, this real estate company has only completed 7% of the revenue plan and 11.5% of the profit plan for the whole year.

In terms of structure, revenue from real estate business accounted for 81% of Nam Long's total revenue in the first half of the year, reaching nearly VND372 billion, mainly from the Southgate and Izumi projects; revenue from providing services accounted for 14%, reaching VND64 billion. This was followed by revenue from construction services (VND7.2 billion) and from investment real estate leasing activities (VND14 billion), accounting for 1.6% and 3%, respectively.

Despite its profitable business, Nam Long has had major problems with cash flow. Net cash flow from operating activities was negative by nearly VND851 billion in the first half of the year. This figure was up to VND1,127 billion in the same period last year. The persistent negative cash flow has made investors question the quality of this real estate company's profits.

Source: https://www.congluan.vn/loi-nhuan-giam-manh-cung-dong-tien-am-nang-nam-long-nlg-muon-vay-950-ty-dong-trai-phieu-de-dao-no-post306247.html