Why is Shark Thuy in trouble?

Delisting, Board members flee

Apax Holdings Investment Joint Stock Company (IBC), chaired by Mr. Nguyen Ngoc Thuy (Shark Thuy), has just announced unusual information about receiving resignation letters from the positions of members of the Board of Directors of Mr. Quach Manh Hao, Mr. Nguyen Minh Chinh and Mr. Nguyen Trong Quynh.

Mr. Quach Manh Hao is a familiar name in the Vietnamese stock market. Mr. Hao joined the Board of Directors of Apax Holding in mid-2017 but lives in the UK; teaches and researches at Lincoln University.

Mr. Hao previously sold most of his IBC shares for profit, a large portion of which was sold when the stock was around its historical peak in 2021. Mr. Hao currently holds 110,000 shares, accounting for 0.13%.

With 3 members of the Board of Directors resigning, Apax Holdings currently has only 2 members, including Mr. Nguyen Ngoc Khanh and Chairman Nguyen Ngoc Thuy (Shark Thuy).

Board members fled Apax Holdings in the context of the Ho Chi Minh City Stock Exchange (HOSE) announcing on November 22 the mandatory delisting of IBC shares of Apax Holdings Investment JSC.

IBC is under 3 monitoring for violations, including warning due to not holding the Annual General Meeting of Shareholders more than 6 months from the end of the fiscal year; Control due to late submission of the 2023 semi-annual audited financial report more than 30 days from the regulation; and Suspension of trading due to continued violations of regulations on information disclosure on the stock market after being placed on the restricted trading list.

To date, Apax Holdings has not yet announced the audited financial statements for 2022, the financial statements for the first and second quarters of 2023, the audited semi-annual financial statements for 2023, the management report for the first 6 months of 2023, and has not yet organized the 2023 Annual General Meeting of Shareholders.

According to HOSE, since the time of suspension of trading, the company's information disclosure violations have not been resolved, and are likely to continue to occur and prolong, seriously violating the obligation to disclose information and affecting the rights of shareholders.

Apax Holdings is the owner of the once largest English chain in Vietnam: Apax English JSC (Apax English/Apax Leaders). IBC is a subsidiary of EgroupEducation Group JSC. By the end of 2022, Shark Thuy owned 6.17% of IBC's capital. Meanwhile, Egroup held nearly 16.8% of IBC.

Hot growth in education sector, stuck in real estate

Shark Thuy's Apax Holdings had a period of hot growth. After seeing the opportunity in the billion-dollar education sector, Shark Thuy expanded the system of English training centers at an extremely fast pace and became the largest English chain in Vietnam. Revenue exceeded 1,000 billion VND in 2018 and doubled to 2,000 billion VND shortly after.

Apax English/Apax Leaders centers have sprung up in many provinces and cities across the country. According to the introduction, this system has more than 120 centers nationwide under the Apax Leaders brand, spread across more than 30 provinces and cities with about more than 120,000 students studying.

However, the Covid-2019 pandemic has caused many difficulties for educational centers.

Shark Thuy's Apax Holdings has more difficulties when entering the real estate market. The real estate market has been sluggish and almost frozen since 2022 until now, pushing many businesses into a state of illiquidity.

Over the past year, Shark Thuy’s company has restructured, using both real estate and household products to pay off debts for investors. However, Apax Holdings still cannot escape from difficulties. IBC shares have fallen below the “iced tea” level, less than 2,000 VND/share, down more than 10 times in over a year, and have been suspended from trading since September 18.

Although Apax Holdings is facing difficulties and its stock price is at a "tea" level, Shark Thuy plans to list Apax Leaders on the stock exchange. Recently, Mr. Thuy affirmed that Apax Leaders will definitely restore its business activities in Ho Chi Minh City.

Accordingly, the Apax English center chain is still considered a unit with many bright spots through restructuring activities. Egroup Corporation aims to optimize business operations to generate profits. From there, it will carry out the plan to find large investment funds, bring Apax Leaders to the stock exchange in the future and ensure debt repayment obligations to investors.

It can be seen that Apax English is a fast-growing English center system in Vietnam. Mr. Nguyen Ngoc Thuy has the ambition to make the business break through in scale but has encountered many difficulties due to poor business management.

In a direct exchange at VietNamNet , Mr. Nguyen Ngoc Thuy himself admitted that Apax English had developed too quickly. Since mid-2019, he had planned to reduce borrowing costs, restructure from debt to capital raising, and approach investment funds and raise capital in 2020. However, the Covid-19 pandemic occurred and that plan was also changed.

Mr. Thuy said that when the company was on the winning streak, it went quite fast and encountered a big stumble in 2019. This was also the time when Egroup opened the most English centers, which were in operation for a very short time before having to close. There was a period when the company lost nearly 1,000 billion VND in 6 months. Interest expenses and financial expenses made the company "extremely difficult".

In business, the line between breakthrough and crisis is quite fragile. Risks are becoming greater as the world becomes more uncertain. Geopolitical fluctuations, natural disasters, policy changes… are very fast and can cause many businesses to go from having great prospects to bankruptcy. Even organizations considered “too big to fail” struggle to find a way to avoid bankruptcy after just a few wrong decisions.

Shark Thuy ran out of breath because of education, borrowed nearly a thousand billion to invest in real estate

With a plan to attract thousands of billions of VND and invest in the new real estate sector. This is a strong business expansion plan of Shark Thuy after a year of difficulties for education businesses due to the Covid-19 pandemic.

Source