Using 200 billion VND of newly mobilized capital to pay debt for Bao Ninh 2 project
Recently, Nam Mekong Group Corporation announced a progress report on the use of capital mobilized from the share offering from September 2022.
In this offering, Nam Mekong offered 33.4 million shares to the public, raising VND342.9 billion. Of which, the proceeds were VND334.1 billion, and the surplus capital reached VND8.8 billion.
Initially, according to the Resolution of the Extraordinary General Meeting of Shareholders No. 2010/2021/NQ-ĐHĐCĐ-MKG dated October 20, 2021, the money will be used to invest in the Bao Ninh 2 Urban Area project. Of which, 200 billion will be used to pay land use fees and 134.1 billion will be used to build works on the land.
Nam Mekong (VC3) has used up almost all of its capital mobilized since September 2022 to pay off debt for the Bao Ninh 2 project. Currently, Bao Ninh 2 still accounts for 80% of Nam Mekong's inventory (Photo TL)
However, Resolution No. 02/2022/NQ-ĐHĐCĐ-MKG of the Extraordinary General Meeting of Shareholders dated December 5, 2022 of Nam Mekong approved the change in the capital use plan. Of which, VND 200 billion was used to repay the principal of the loan from Vietnam Technological and Commercial Joint Stock Bank for the purpose of borrowing "Payment of land use fee for Bao Ninh 2 Urban Area Project" and VND 134.1 billion was used to construct works on land belonging to this project.
In the report on the progress of capital use, Nam Mekong said that it had used up 200 billion to pay off debts as stated in the resolution. The amount of 134.1 billion VND spent on construction still had nearly 80 billion VND left.
Inventory at 80% at Bao Ninh 2 Project, South Mekong, 5 consecutive years of negative cash flow
Looking at Nam Mekong's asset structure at the end of the second quarter of 2023, the company's total assets reached VND 3,621.9 billion. Notably, the recorded inventory was very high, up to VND 2,340 billion. Currently, inventory accounts for 64.6% of the company's asset value.
This inventory is all construction costs in progress at projects that VC3 is implementing. Of which, 80% of the inventory is at Bao Ninh 2 project, equivalent to 1,847.7 billion VND in inventory at this project. Based on total assets, Bao Ninh 2's inventory accounts for 51% of Nam Mekong's assets.
Inventory fluctuations of the Bao Ninh 2 project show that at the beginning of 2022, the inventory only accounted for 355.3 billion VND. At the end of 2022, the inventory increased to 1,911.4 billion VND. By mid-2023, the inventory of Bao Ninh 2 still accounted for 1,847.7 billion VND.
This means that a large amount of capital from South Mekong is "stuck" in this project. Therefore, it is not too difficult to understand that the capital of 334.1 billion mobilized since September 2022 was quickly disbursed for Bao Ninh 2, but the cash flow of South Mekong is still continuously negative through each stage.
Specifically, in the past 5 years, VC3's net cash flow from operating activities has not recorded a positive year. From 2018-2022, the most positive year was 2019, VC3's cash flow was only negative 19.9 billion VND.
The peak of the business cash flow deficit is in 3 years 2018, 2020 and 2022 with negative cash from business activities of 181.6 billion, 163.4 billion and 214.3 billion VND respectively.
To compensate for this cash flow shortage, Nam Mekong has had to increase borrowing activities as well as raise more capital from shareholders. The amount of cash from borrowing sources shown in the Cash Flow Statement from Financing Activities has increased gradually each year. From 178.7 billion in 2018, it has reached a peak of 734.6 billion in 2022.
Besides, VC3 has also increased capital twice by issuing shares to existing shareholders in 2020 and 2022. The amount of money collected from these two share issuances was 283.8 billion and 334.1 billion VND.
6 years without paying a single cash dividend
The period 2008 - 2017 was the period when VC3 continuously paid cash dividends regularly. Cash dividends paid in these years had a rate ranging from 10% - 22% depending on the business situation. Only in 2016, VC3 paid cash dividends at a rate of 5% and 29% in shares.
In the period from 2018 to 2022, VC3 only paid dividends in shares and rights to purchase additional issued shares, but did not spend a single dong to pay dividends in cash.
Specifically, at the end of 2019, VC3 paid 2017 dividends in shares at a rate of 15%. Also in this year, the company issued shares at a ratio of 1:1 to existing shareholders at a price of VND10,000/share. Charter capital increased by VND283.8 billion.
In 2021, VC3 continues to pay stock dividends to shareholders at a total rate of 9.5% (including 2.5% dividend in 2018 and 7% dividend in 2019).
In 2022, VC3 will also increase its capital by issuing shares at a ratio of 2:1. The number of additional shares issued is 33,405,740 shares, charter capital of 334.1 billion VND. As mentioned above, this capital has been almost entirely invested in the Bao Ninh 2 project.
In 2023, VC3 issued shares to pay dividends at a rate of 11.5% to shareholders. Thus, for 5 years, VC3 has not paid any cash dividends to existing shareholders.
Source
Comment (0)