The shareholder meeting season is heating up.

Việt Nam•01/04/2024

The shareholder meeting season is about to enter its peak. With businesses facing numerous challenges, dividend distribution is one of the most discussed issues this year. Furthermore, due to the active stock market, the issuance of additional shares to increase capital is expected to further heat up the shareholder meeting season.

This year, the issue of dividend payments has become even more heated due to the general difficulties faced by businesses, as not all companies are profitable enough to pay generously; some even delay, postpone, or cancel dividend payments.

One example is FECON Joint Stock Company (stock code: FCN), which plans to pay nearly 79 billion VND in dividends for 2022, after a period of delayed payment due to business difficulties and budget constraints. However, shareholders will only receive the majority of this amount at the end of this year. The company stated that it will not make a single payment but will divide it into two installments: 1% on March 29, 2024, and the remaining 4% is expected to be paid in December 2024.

The company's delayed dividend payments are related to unfavorable business conditions. Specifically, the progress of several large projects since the beginning of 2023 has been slower than planned, affecting bidding processes, leading to prolonged contract signings, and low construction output. This is compounded by high interest expenses and difficulties in raising capital. In fact, in 2023, the company's net revenue decreased by 5% compared to 2022, reaching nearly 2,880 billion VND. The company incurred a loss of over 32 billion VND, while the previous year it had a profit of nearly 40 billion VND.

Not only have some companies delayed dividend payments, but others have announced postponements or even cancellations. A prime example is Binh Dinh Food Joint Stock Company (Bidifood, stock code: BLT). According to Bidifood, the cost of goods sold has surged by over 50% since July 2023, with the average price of rice exceeding 15,500 VND/kg. The company has to maintain a circulating reserve of over 3,000 tons of rice, worth more than 46 billion VND, which limits capital resources and increases interest expenses. In addition, the company needs to raise approximately 40 billion VND for capital construction investment over the two years of 2023-2024.

To ensure a sound financial situation, sufficient capital for production and business operations, and reinvestment to restore production, after paying an interim dividend of 30%, the Board of Directors has submitted to shareholders for approval the suspension of the remaining dividend payment of 140.5% in cash.

For example, Southern Basic Chemicals Joint Stock Company (stock code: CSV) announced a postponement of the 2023 cash dividend payment, citing the need for efficient capital utilization. The interim dividend payment for 2023 will be made at an appropriate time. Similarly, Binh Duong ACC Investment and Construction Joint Stock Company (stock code: ACC) also approved the postponement of the 2022 dividend payment because ongoing construction projects in 2023 have not been completed and accepted as planned, leading to delays in debt collection.

Customers conducting transactions at TechcomBank . (Illustrative photo: Thanh Tan/TTXVN)

While shareholders of many businesses are frustrated by the long-standing delays in dividend payments, bank shareholders are celebrating. Accordingly, banks are expected to pay dividends for 2023, which will be approved at the 2024 general meeting, such as: Vietnam Technological and Commercial Bank (Techcombank, stock code: TCB) will pay a 15% cash dividend; Military Commercial Bank (stock code: MBB) will pay 20% in both cash and shares; and Asia Commercial Bank (stock code:ACB ) will pay 10% in cash and 15% in shares. Vietnam International Commercial Joint Stock Bank (stock code: VIB) is allowed to pay dividends up to 12.5% in cash and 17% in shares, while Vietnam Prosperity Commercial Joint Stock Bank (stock code: VPB) has paid cash dividends for 5 consecutive years and is permitted to use 30% of its annual after-tax profit to pay dividends to shareholders.

In addition, some banks are distributing dividends to increase capital, such as the Vietnam Investment and Development Bank (stock code: BID), Lien Viet Post Bank (stock code: LPB), etc.

According to Ms. Do Hong Van, Head of Data Analysis Department at FiinGroup Vietnam Joint Stock Company, the banking sector in 2024 will still face many difficulties related to bad debts, leading to significant provisioning pressure; risks from the corporate bond market with approximately 300 trillion VND maturing in 2024; and the real estate market needing time to resolve legal issues.

However, the banking sector's outlook remains positive, with projected after-tax profits increasing by 12-15% compared to 3.5% in 2023, based on a recovery in credit growth amidst low interest rates, a healthier economy with higher growth than the previous year, and improved net interest margin (NIM).

According to Ms. Khuat Thuy Quynh, Director of Legal Affairs at SSI Securities Corporation, the demand for public offerings of securities in 2024 is projected to increase sharply compared to previous years thanks to the positive impact from the gradually recovering secondary market.

According to Ms. Quynh, statistics from the State Securities Commission show that capital raised through securities offerings has grown significantly, with a total value of 95,170 billion VND raised in 2023. Accordingly, the proportion offered to existing shareholders is not large, mainly concentrated in public bond offerings by banks and some large enterprises.

The secondary market is vibrant, and offerings to existing shareholders are expected to increase sharply. The failures caused by excessive reliance on bank loans and bonds serve as a lesson for businesses. Therefore, companies are focusing more on increasing equity capital to reduce debt leverage.

From a management perspective, Ms. Ta Thanh Binh, Director of the Market Development Department of the State Securities Commission, believes that the main focus of the market this year is the goal of upgrading its ranking, therefore listed companies should not be left out of this "game".

During the 2024 shareholders' meeting season, businesses can carry out tasks related to foreign ownership. Businesses can adjust their registered business lines, but this requires approval from the shareholders' meeting. In addition, businesses also need to prepare in advance for disclosing information in English.

Currently, businesses need to disclose information periodically such as: information about shareholder meetings, financial reports, corporate governance, progress in capital utilization after the public offering, etc. At the same time, they should focus on communicating with domestic and foreign shareholders, directly sharing information and experiences with investors.

According to Baotintuc.vn

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