Continuing the decade-long journey of debt reduction

At the beginning of the new year 2024, Hoang Anh Gia Lai - HAGL Joint Stock Company (HAG), chaired by Mr. Doan Nguyen Duc (Bau Duc), registered 13.31 million HNG shares of Hoang Anh Gia Lai - HAGL Agrico International Agricultural Joint Stock Company (HNG) in the period from January 9 to February 7. The purpose of the sale is to repay BIDV Bank's bond debt.

The transaction is expected to be favorable in the context of HAGL Agrico shares recently increasing sharply and attracting quite a large cash flow.

In the last 10 trading sessions, HAGL Agrico shares of billionaire Tran Ba ​​Duong Thaco increased in 8 sessions, of which 4 sessions hit the ceiling. HNG shares jumped from VND3,600 in mid-December 2023 to VND5,250/share in the early morning of January 5, equivalent to an increase of 46% within 3 weeks.

If the sale is successful, Hoang Anh Gia Lai of Bau Duc can earn an additional 70 billion VND. After the transaction, HAGL will still have more than 91 million HNG shares (equivalent to 8.24%). This is also a source that can help HAGL continue to restructure debt when needed.

Over the past decade, Bau Duc's Hoang Anh Gia Lai has struggled to reduce the huge debt of tens of thousands of billions of dong that was formed during the process of large investments in agriculture, including rubber in Indochina, but failed due to the plummeting rubber prices.

2023 is a year for Hoang Anh Gia Lai to thoroughly deal with debt since HAGL Agrico had a strategic cooperation with Thaco since 2018. Tens of thousands of billions of VND from Mr. Tran Ba ​​Duong's Thaco helped Mr. Duc's business escape bankruptcy.

Most recently, in the last days of 2023, HAGL decided to transfer all 2.75 million shares it holds at Bapi Hoang Anh Gia Lai JSC. This is a banana-eating pig brand launched in 2022.

During the 10-year period from 2013 to present, 2023 is the year that HAGL of Mr. Duc is determined to reduce debt the most, beautify the financial report after a decade of difficulties. This move takes place in the context that HAGL has a major strategic investor, LPBank of Mr. Nguyen Duc Thuy (Bau Thuy) and LPBS Securities.

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One of the turning points for HAGL to try to escape from difficulties is to cooperate with Mr. Tran Ba ​​Duong's Thaco.

On December 27, Bau Duc's company decided to sell the University of Medicine and Pharmacy Hospital - Hoang Anh Gia Lai to continue restructuring debt, fulfilling the commitment to be debt-free in the next few years. Accordingly, the Board of Directors approved the transfer of all 9.9 million shares (equivalent to 99%) of charter capital at the University of Medicine and Pharmacy Hospital Joint Stock Company - Hoang Anh Gia Lai to pay the principal of 2016 bonds. The University of Medicine and Pharmacy Hospital - HAGL was established in 2011, in Pleiku city (Gia Lai) with an initial investment capital of 250 billion VND.

Previously, in the third quarter of 2023, HAGL also sold Hoang Anh Gia Lai Hotel, earning 180 billion VND, to repay HAGL bonds issued in 2016 to the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV).

Waiting for the effect of "breakthrough formula"

The fact that HAGL of Mr. Duc is rushing to sell assets is to pay off and is expected to be debt-free in the next few years as committed by this football boss. The signal is also quite positive when the debt is decreasing rapidly and the HAGL boss has a big companion, Mr. Thuy - Chairman of the emerging bank LPBank.

Previously, in 2018, HAGL recorded financial debt of up to VND28,000 billion. By the end of the third quarter of 2023, the company still owed about VND7,778 billion. This figure will be even lower if calculated by the end of 2023 after recent debt repayments.

It can be seen that determination has helped HAGL pay off most of the debt that was previously formed. The money collected through the sale of HAGL Agrico shares as well as the sale of HAGL's assets has helped Bau Duc's business reduce its debt burden.

Besides, the business's cash flow signal has brightened again after Mr. Duc's HAGL found a breakthrough business formula: growing durian trees with 1 capital and 4 profits on the strength of the business's large land area.

Some forecasts say that Mr. Duc's HAGL may return to a profit of thousands of billions per year.

Recently, a piece of information that helped HAG shares skyrocket was Eximbank reducing interest debt by more than VND 1,400 billion for Gia Lai Livestock Joint Stock Company - a subsidiary of HAGL. With this move, HAGL will be able to recover its 2023 profit, thereby estimating the full-year profit to reach VND 2,150 billion, double the plan.

Mr. Duc will focus his money on growing durian - a fruit that will have a very high selling price in 2023, up to hundreds of thousands of VND/kg thanks to favorable exports to China. It is estimated that by 2025, the Chinese durian market could reach 20 billion USD.

With a yield of about 25 tons/ha and a high price of sometimes up to 200,000 VND/kg, each hectare of durian can bring growers a few billion VND in profit.

According to HAGL, in the first durian harvest in the third quarter of 2023, the company earned 18 billion VND while investing only 3.6 billion VND. HAG's durian area is up to 1,200 hectares, but in 2023, it will only harvest a few dozen hectares.

In 2024, HAGL's durian will be harvested on a large scale. About 700 hectares will be harvested in the fourth quarter of 2024, contributing to HAG's profit of about 2,000 billion VND. By 2026, HAGL's durian growing area will be 2,000 hectares, of which 1,000 hectares will be harvested. HAGL also has 5,000 hectares that can grow more durian.

With profits increasing dramatically and reaching a threshold of several thousand billion VND/year, the ability to pay off all debts in 2026 as Mr. Duc shared is considered feasible. Asset sales also contribute to faster debt restructuring. In addition, the plan to sell 130 million shares is expected to also bring in thousands of billions for HAGL.

Along with debt settlement, Bau Duc's company shares have increased sharply by nearly 70% since the beginning of November, from VND8,000/share to VND13,300/share as of now.

The breakthrough for more than 2 consecutive months has brought HAG stock price to a 3-year peak. Profit-taking pressure has also appeared quite strongly. However, many people still bet on the fluctuations of this stock after HAGL signed a comprehensive cooperation agreement with LPBank of Mr. Thuy.

Many people believe that a sustainable agricultural empire will emerge at the time when Bau Duc is in his twilight years. After many ups and downs, HAGL went from being a big player in the real estate sector to hydropower and then rubber. Now, HAGL may focus more on its strength of durian after a decade of Bau Duc's management.

Mr. Duc wants to continue selling the banana-eating pig chain . Hoang Anh Gia Lai has just decided to divest all its capital from the company specializing in distributing products from banana-eating pigs. Mr. Duc's business is expected to earn more than 20 billion VND.