Losing hundreds of billions due to stock investment, where does Tri Viet Asset Management get money to buy treasury stocks?

Tri Viet Asset Management (TVC) acquired 10 million shares.

Recently, at the General Meeting of Shareholders of Tri Viet Asset Management Group held on June 24, 2023, the company's shareholders approved the repurchase of up to 10 million shares. This repurchase amount corresponds to 8.43% of the total outstanding shares. The repurchase plan will be implemented in 2023.

Losing hundreds of billions due to stock market investments and asset management, where will Tri Viet get the money to buy shares? (Figure 1) — TVB and TVC are expected to spend tens of billions of VND to buy back shares (Photo: Provided)

It is estimated that TVC will need to spend approximately 68 billion VND to acquire these 10 million shares.

Regarding the price movement of TVC shares, in the trading session of July 6, 2023, the stock was still recording a price of VND 6,400 per share. Although this price has recovered from the low of VND 4,000 per share reached in November 2022, it is still relatively far from the peak of VND 9,800 reached in early August 2022.

In addition, Tri Viet Securities (TVB), another company within the TVC ecosystem, has also planned to repurchase 5 million shares, equivalent to 4.46% of the total outstanding shares. It is estimated that TVB will have to spend 28 billion VND.

First-quarter revenue fell 76%, with profit only recorded thanks to the reversal of provisions.

According to the consolidated financial report for the first quarter, TVC's net revenue reached VND 18 billion, a decrease of 76% compared to the same period last year. The cost of goods sold also decreased, but only by 66%. This resulted in a gross profit of only VND 14 billion for the period, with the gross profit margin falling from 83% to just 76%.

In the first quarter, the company recorded almost no financial revenue. Meanwhile, financial expenses were negative at VND 79 billion thanks to a reversal of provisions for securities depreciation amounting to VND 83 billion. Thanks to this financial indicator, the company's after-tax profit reached VND 80 billion, 2.6 times higher than the first quarter of last year.

Regarding the fluctuations in first-quarter revenue, TVC attributes the cause to a decline in brokerage and margin lending activities, which recorded only 4 billion and 13 billion VND respectively. Meanwhile, financial revenue also decreased significantly, causing a considerable impact on the company's profits.

Another reason that many shareholders are concerned about is that the Chairman of the Board of Directors of TVC, Mr. Pham Thanh Tung, has also been prosecuted for stock market manipulation due to his involvement in the manipulation of two stock codes BII and TGG.

Stock investments incurred a temporary loss of VND 292.9 billion due to a decrease in portfolio value.

According to the Q1 2023 financial statements, Tri Viet Asset Management's total assets were recorded at VND 2,248.5 billion, with short-term assets accounting for the majority. Meanwhile, cash and cash equivalents amounted to VND 81.6 billion.

In TVC's asset structure, investments in securities amounted to VND 1,301.5 billion. However, at the end of the first quarter of 2023, the provision for impairment of trading securities was negative VND 292.9 billion. This means that Tri Viet Asset Management is currently recording a loss of VND 292.9 billion due to the decline in securities prices.

Regarding Tri Viet Asset Management's securities portfolio, most stocks experienced price declines. Most notably, the 897.4 billion VND investment in HPG shares of Hoa Phat Group saw its original recorded value of 897.4 billion VND, but its fair value recorded in the first quarter was only 622.6 billion VND.

ForFPT shares, the holdings recorded at original value are VND 289.4 billion, with a provision for impairment of approximately VND 1.8 billion. Other significant stocks in the portfolio include: MWG, TDH, MBB, NKG, DDV...

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