2024 Securities Industry Shareholders' Meeting: Capital increase is still hot
The story of offering and increasing financial capacity at securities companies is expected to continue to heat up the 2024 annual general meeting of shareholders season.
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| MBS is among the group of securities companies with the fastest increase in charter capital today. Photo: Duc Thanh |
Many capital raising plans
Last week, Guotai Junan Securities Company (GTJA) officially received approval from shareholders to double its charter capital from VND693.5 billion to VND1,387 billion, through the plan to issue new IVS shares to existing shareholders at a ratio of 1:1.
Guotai Junan Securities (Hong Kong) Ltd - the Hong Kong parent company that owns 50.97% of GTJA's capital - will continue to inject additional capital after 5 years from the date of completion of the merger and acquisition (M&A) deal to take control and rename this securities company. The company will spend 75% of the raised capital to supplement margin lending activities, the rest to develop derivative products and supplement capital to support operations.
Also in early March, Techcom Securities Company (TCBS) completed collecting shareholders' approval for the private offering of up to 2.25 million additional shares. The purchasers included 59 individuals, including the management team, staff, employees and partners, according to the list approved by the Board of Directors.
With the offering price of VND10,000, much lower than the book value (over VND108,000/share), this capital increase, in addition to the purpose of supplementing operating capital, also aims to show gratitude and retain talents and partners. Preparations for the offering are being carried out urgently, and the offering registration documents have been approved.
Not only in extraordinary shareholder meetings, the story of capital increase will appear more often at the annual general meeting of shareholders of securities companies this year. According to documents sent to shareholders updated to the present time, Vietcap Securities and MB Securities have both submitted these reports to shareholders.
Notably, Vietcap Securities will offer 143.63 million shares to strategic investors in a private offering at the annual general meeting of shareholders scheduled to be held on April 2. VCI shares, equivalent to 20% of the new capital, will be sold at a price no lower than the book value at the end of 2023 (VND 16,849/share). The company expects to collect VND 2,420 billion and will allocate most of it to margin lending activities (VND 2,120 billion), the remainder (VND 300 billion) to proprietary trading activities.
In addition, Vietcap also issued 4.4 million ESOP shares (equivalent to 1% of charter capital) at an offering price of VND12,000 and issued an additional 132.57 million shares from equity capital, equivalent to a ratio of 30%. Charter capital is expected to increase from VND4,375 billion to VND7,181 billion.
Increasing charter capital is also one of the contents that MB Securities Company (MBS) presented to shareholders at the general meeting of shareholders, held on March 28. At present, MBS has not updated this presentation, so the specific method is not clear.
In 2023, MBS will be among the securities companies with the fastest increase in charter capital (nearly VND 571 billion). However, the additional capital will come from equity, not from raising new capital on the market.
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Big advantage from capital
In the shareholder meeting documents, MB Securities set an ambitious business plan with financial targets never achieved in its history of operation. The company plans to achieve revenue of VND2,786 billion and pre-tax profit of VND930 billion, up 53% and 35% respectively compared to the actual level in 2023.
Similarly, along with the capital increase plan, Vietcap Securities set a pre-tax profit target of VND 700 billion, an increase of 23% compared to the actual level in 2023, although the revenue plan is quite cautious (increasing by less than 2%).
Capital is an essential resource for ordinary businesses and is even more important for financial institutions such as securities companies. The 2024 business plan of Saigonbank Berjaya Securities (SBBS) shows a modest profit figure of nearly VND 356 million. However, to achieve this result, it is also necessary to have the condition that the Company can mobilize capital in the second half of the year.
“In general, SBBS’s capital constraints are the main reason for the significant decline in revenue. Thanks to the reduction of operating costs, management costs and financial costs, the company only lost over 7 billion VND in 2023,” said Mr. Tran Manh Hung, General Director of SBBS in a report to shareholders. The 210 billion VND receivable in the Huynh Thi Huyen Nhu case has made SBBS “live” precariously for the past decade, with current assets of less than 40 billion VND.
According to many experts' forecasts, the securities industry's business results will continue the recovery momentum of 2023, in a more favorable market context thanks to the low interest rate environment attracting domestic individual cash flow, the possibility of a reversal of foreign cash flow in the scenario of the US Federal Reserve (Fed) lowering interest rates and the prospect of upgrading Vietnam's market.
While the market pie has not expanded as rapidly as expected, competition will become increasingly fierce. Increasing financial capacity as well as efforts to supplement capital sources give securities companies an advantage in the competitive race, especially in the brokerage and margin lending segments.
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