Construction firms race to buy back stocks

March 04, 2020 - 07:45
A couple of companies have announced their plans to repurchase their own stocks to stablise prices.


A BOT (build-operate-transfer) booth constructed by Cường Thuận IDICO Development Investment JSC (CTI). CTI plans to buy back 30 per cent of its total shares listed on the stock market. — Photo


HÀ NỘI — Two construction and real estate companies have announced plans to repurchase their own stocks to stabilise prices.

Cường Thuận IDICO Development Investment JSC (CTI) plans to buy back 30 per cent of its total shares listed on the stock market.

CTI will carry out a public tender with a fixed buying price of VNĐ22,100 (US$0.95) per share. The company is expected to spend VNĐ418 billion to buy a total of 18.9 million shares.

VRC Real Estate and Investment Joint Stock Company (VRC) will also purchase back up to 20 per cent of its shares.

The company has registered to buy a maximum of 10 million shares, equivalent to a value of VNĐ75 billion. VRC hit its ceiling prices in the last four trading sessions.

Investment and Construction Development Joint Stock Corporation (DIG) has recently approved the plan to buy back 15 million shares.

Although the company only plans to buy a maximum of 4.78 per cent of the outstanding shares, it will cost VNĐ203 billion.

If those three companies manage to complete their plans, the total amount of money they will pour into the market will reach approximately VNĐ700 billion.

Last year, the stock market witnessed a series of stock repurchasing deals worth up to VNĐ 13 trillion. Among them, real estate-retail-technology giant Vingroup and its arms Vinhomes and Vincom Retail spent more than VNĐ7.5 trillion. Vietjet poured in VNĐ2.35 trillion.

Money from where?

CTI has never repurchased stocks before. Over the past five years, the company’s capital has grown fast, from VNĐ330 billion to VNĐ630 billion.

Currently, CTI’s major shareholders are mainly investment funds such as Victory Holding Investment Limited, Kingsmeard Vietnam and Indochina Growth master fund and its Deputy General Director Trương Hồng Loan.

The capital CTI will use to repurchase stocks often originates from equity capital, undistributed after-tax profits or from funds. The narrowing of the remaining profits may affect the dividend payout plan for 2019.

CTI’s cash balance is only VNĐ83 billion, decreasing in 2019 because the company focused on disbursing construction investment.

At VRC, the cash balance is only VNĐ14 billion. Real estate inventories account for the largest amount of CTI’s total assets, which value VNĐ1.13 trillion, of which the two residential projects of Nhơn Đức and Phước Lộc-Nhà Bè total approximately VNĐ869 billion.

However, liquidity of these project inventories remain doubtful as in the fourth quarter of 2019, the figure only rose by about VNĐ2 billion.

Along with plans to buy back shares, VRC has submitted a request to shareholders to allow Happy Land Investment JSC to buy to increase the ownership ratio to over 25 per cent, without having to undergo a public bid.

If approved, the number of shares VRC is able to repurchase could be sold to the new shareholder. — VNS