CII wanted to divest all its capital from SII to get money back but failed due to low stock liquidity.
Ho Chi Minh City Infrastructure Investment Corporation (HoSE: CII) has just announced that it cannot sell all 7.97 million shares of Saigon Water Infrastructure Corporation (SII) as previously registered. The reason is due to the low liquidity of the stock code SII.
CII's ownership at SII is 7.97 million shares, equivalent to 12.36% of charter capital. Mr. Nguyen Van Thanh is currently Deputy General Director of CII, also a member of the Board of Directors and General Director of SII.
CII planned to divest all capital from SII but failed due to low stock liquidity (Photo TL)
It is known that CII has had to continuously sell shares in SII in recent months. From June 6, 2023 to July 5, 2023, CII sold nearly 24.7 million SII shares, reducing its ownership from 50.62% to only 12.36%. Up to now, CII still wants to continue to divest all capital from SII but has failed due to the stock's liquidity being too low.
CII's divestment took place when SII recorded a net loss of up to VND19 billion in the first 6 months of the year. At the same time, this was also the period when CII showed an imbalance in capital sources, high debt, and pressure on interest expenses weighing on the unit's cash flow.
Q2/2023 just escaped loss thanks to financial revenue
CII's latest Q2/2023 business results recorded net revenue of VND843.4 billion, down 15.2% year-on-year. Cost of goods sold accounted for the majority of the revenue structure at VND641.6 billion. The company's gross profit reached VND250.6 billion, down 55.4% year-on-year. The company's gross profit margin decreased from 45.5% to only 23.9%.
Notably, financial revenue increased sharply from VND 259.5 billion to VND 461.9 billion during that period, equivalent to an increase of 128.2%.
Most of this financial revenue is recorded in the form of investment cooperation, capital support, deposits and bonds. This is also the main revenue that helps the company's profit escape loss in Q2.
On the contrary, financial expenses also increased by 41.2% to VND454.8 billion. Of which, interest expenses alone accounted for VND363.6 billion. This means that CII has to pay up to VND4 billion in interest every day, not including other expenses.
Business administration expenses and sales expenses in the period were VND35.8 billion and VND121.6 billion, respectively. Profit after tax in the second quarter reached VND83.3 billion, down 34.3% over the same period. If it weren't for the financial revenue of VND461.9 billion, CII would have certainly suffered a loss in the second quarter.
Pressured by a 13,000 billion debt, where does CII plan to get the money to do 6 75,000 billion BOT projects?
By the end of the second quarter of 2023, CII's total assets reached VND 26,649.2 billion, down 6.7% compared to the beginning of the year. Of which, the company is holding VND 954.6 billion in cash and cash equivalents. Along with that is a small deposit of VND 2.5 billion along with VND 615.6 billion recorded in the securities investment section.
One thing to note in CII's capital structure is that short-term debt has increased from VND5,166.4 billion to VND6,039.4 billion. This means that short-term debt has increased by VND615.6 billion in just the first 6 months of the year.
Long-term debt is also accounting for 7,112.3 billion VND. If short-term debt is added, CII's total debt has reached 13,151.7 billion VND. This debt is currently 62.2% higher than CII's equity.
Recently, CII also planned to present to shareholders at the 2023 Extraordinary General Meeting of Shareholders a plan to study 6 BOT projects with a total investment of 75,000 billion VND.
The projects include: Ho Chi Minh City - Trung Luong - My Thuan Expressway Phase 2 with VND 22,000 billion; Improving traffic capacity in the Northwest area of Ho Chi Minh City with VND 19,059 billion; Upgrading and expanding National Highway 1A from Tan Kien intersection to Long An border with VND 11,982 billion; Project to improve traffic capacity along Pham Van Dong - Nguyen Xi - Ung Van Khiem - Nguyen Huu Canh route with VND 10,108 billion; Upgrading and expanding North-South axis project from Nguyen Van Linh to Ben Luc Long Thanh Expressway with VND 6,625 billion; Upgrading and expanding the connecting route of Ho Chi Minh City - Trung Luong Expressway with VND 5,048 billion.
With a huge debt of 13,000 billion and the pressure to pay interest of up to 4 billion per day, it is still unclear where CII plans to get the money to carry out the 6 BOT projects mentioned above?
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