Investors are fleeing nearly 200 billion VND.

VietNamNet•17/08/2023

During the trading session on August 17th, investors fled from LDG shares of LDG Investment Joint Stock Company after the Ho Chi Minh City Stock Exchange (HOSE) announced the complete cancellation of the sale of over 2.6 million LDG shares conducted on August 15th by Mr. Nguyen Khanh Hung, Chairman of the Board of Directors.

The reason for cancellation is that Mr. Hung traded stocks without reporting or disclosing information before executing the transactions, as required by law.

At the close of trading on August 17th, LDG shares fell to their lower limit, with over 25.5 million units offered for sale at the floor price, not including shares placed in ATC orders. Nearly 6.5 million shares were fully matched at the floor price, executed sporadically throughout the session.

Thus, if we only consider the number of shares traded and the number of shares offered for sale at the floor price, the total value has reached nearly 200 billion VND. Investors are fleeing a real estate company that once experienced periods of significant volatility on the stock market.

Recently, investors have been very upset about cases of illegal selling on the stock market. These illegal sales have occurred over the years, causing losses for many people, while the leaders of some companies have repeatedly violated regulations and offered unreasonable explanations.

At many securities companies, the software has updated the list of insider and related party accounts on the trading system. When a customer places a securities order, the system warns the customer that they are an insider or related party subject to disclosure requirements before trading.

Explaining the clandestine sale of shares, Mr. Nguyen Khanh Hung stated that on August 15th, he conducted a transaction selling over 2.6 million LDG shares, but because he was on a business trip between August 8th and 15th, he was unable to personally disclose the information.

Instead, he assigned the task of releasing the information to his secretary, but due to the new staff member's unfamiliarity with the regulations, errors occurred, delaying the information release process.

*LDG was once a real estate company that made waves on the stock market.*

With no major shareholders, LDG is increasingly at a disadvantage.

Mr. Hung's divestment comes as LDG's share price is on the recovery path, having increased by nearly 50% since the beginning of the year.

However, the company has still faced a lot of negative information recently.

In the second quarter of 2023, LDG reported revenue of just over 300 million VND and a loss of 74 billion VND, bringing the net loss for the first six months of 2023 to over 144 billion VND.

Recently, the Board of Directors of LDG decided to extend the deadline for holding the 2023 annual general meeting of shareholders (for the third time) until August 31, 2023. Previously, the first and second general meetings of this company could not take place due to insufficient attendance as required by regulations.

Mr. Hung is currently the Chairman of LDG and holds nearly 18.6 million LDG shares, equivalent to 7.25% as of the end of 2022.

Recently, Mr. Hung had many of his shares sold off due to forced liquidation. On May 18-19, a securities company sold nearly 5 million shares to him through forced liquidation. After the transaction, Mr. Hung's shareholding in LDG decreased from 5.86% to 3.92%, officially ceasing to be a major shareholder in LDG. In April, Mr. Hung had also had over 3.5 million LDG shares sold off due to forced liquidation on April 13-14.

Also around May, LDG shares experienced several sharp declines due to news of the indictment in the case of illegal construction of nearly 500 houses at the Tan Thinh residential area project in Dong Nai province, which LDG is the investor of. According to financial reports, by the end of 2022, the inventory of the Tan Thinh residential area project was VND 463.5 billion, accounting for 38.4% of LDG Investment's total inventory. This is the project with the largest inventory value of the company.

LDG Investment Joint Stock Company was established by changing its name from Long Dien Real Estate Joint Stock Company in 2015. Its charter capital increased from VND 50 billion to VND 750 billion and it is listed on the Ho Chi Minh City Stock Exchange.

In 2016, Le Ky Phung, Chairman of the Board and founder of LDG, stepped down. He was replaced by Nguyen Khanh Hung, who was then a member of the Board of Directors and Deputy General Director of Dat Xanh Real Estate Services and Construction Joint Stock Company (now Dat Xanh Group).

From that point onwards, Dat Xanh Group became the largest shareholder in LDG Group. Consequently, LDG Group has always been considered a shadow of Dat Xanh Group. Since 2017, LDG has entered the apartment segment in Ho Chi Minh City by launching apartment projects under the Intela brand, such as Saigon Intela, High Intela, and West Intela. They also have projects in neighboring provinces.

However, in mid-2020, Dat Xanh (DXG) unexpectedly divested from LDG by deciding to sell all of its nearly 63 million shares, equivalent to 26.27% of LDG's capital. At the same time, DXG's subsidiary, Ha Thuan Hung Construction, Trading and Service Company Limited, also registered to sell all of its more than 25 million LDG shares, equivalent to 10.45% of LDG Investment's charter capital.

In total, the Dat Xanh group sold 88 million shares of LDG Joint Stock Company that they held, equivalent to 36.72% of LDG's charter capital, incurring a loss of approximately 500 billion VND.

This is quite a surprising development because the investment in LDG was considered a strategic investment for DXG, and LDG's business is real estate development, similar to Dat Xanh, and it also has quite good prospects with ownership of many large projects.