TDC shares are making waves thanks to the restructuring "game"

The replacement of two senior leaders in the context of business losses sends a restructuring signal, helping the stock of Binh Duong Trading and Development Corporation (TDC, code TDC) go against the market trend.

"New wine in old bottle" when changing leaders

When the stock market is flat, TDC shares increase and attract cash flow. Statistics from April 16 to July 12 show that TDC shares increased by 28.75%, from VND8,000 to VND10,300/share and continued to increase (at the same time, the VN-Index only increased by 5.4%).

In fact, the increase in TDC shares occurred in the context of many difficulties in the business activities of this enterprise. In particular, in the first quarter of 2024 alone, the Company continued to lose VND 24.1 billion (in 2023, it lost a record VND 402.8 billion), bringing the total accumulated loss to VND 390.57 billion, equal to 39% of charter capital (charter capital of VND 1,000 billion). The amount of cash is only VND 24.2 billion, while the total debt is up to VND 1,576.5 billion, equal to 206% of equity (the industry average ratio is only 45%). In particular, short-term debt is VND 1,332.34 billion larger than total assets, meaning that the Company is using VND 1,332.34 billion of short-term capital with a term of less than one year to finance long-term assets with a term of more than one year.

It is known that in the 2023 Audit Report, the auditing unit, A&A Auditing and Consulting Company Limited, emphasized: “In addition to the loss of VND 402.8 billion in 2023, as of December 31, 2023, Binh Duong Trading and Development Company had short-term debt exceeding short-term assets by VND 1,331.17 billion. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the ability to continue as a going concern.”

In the context of difficult business and many unresolved issues, in just one day, TDC decided to change both the Chairman of the Board of Directors (from Mr. Doan Van Thuan to Mr. Van Viet Cuong) and the General Director (from Mr. Ho Hoan Thanh to Mr. Doan Van Thuan), effective from June 19, 2024.

According to the investigation, Mr. Doan Van Thuan was born in 1967, from 2002 to 2003 he held the position of Chairman of the Board of Directors; from 2003 to April 2022 he was General Director; from April 2022 to June 18, 2024 he was Chairman of the Board of Directors of the Company.

It is known that when participating in TDC's annual congresses, the person who answers questions and shares about business orientation is mainly Mr. Thuan.

Thus, after more than 2 years of leaving the position of General Director to hold the position of Chairman of the Board of Directors, Mr. Thuan has returned to his old position, while the shareholder structure has not changed. Therefore, this is basically related to the change of title at the Company and the decision-making and management rights are still mainly under the leadership of Mr. Thuan.

TDC needs new cash flow TDC was established in 2002, a subsidiary of

Becamex IDC (code BCM) - "tycoon" of industrial and commercial real estate in Binh Duong and other areas across the country.

As a subsidiary of Becamex with 60.7% ownership of charter capital, TDC owns a relatively large land fund, developed for a long time with relatively low capital cost.

Specifically, according to Mirae Asset Securities estimates, TDC currently owns 19.6 hectares in Tan Uyen (Binh Duong), 16.8 hectares in Thu Dau Mot (Binh Duong), 6.8 hectares in Bau Bang (Binh Phuoc), 10.2 hectares in Thuy Nguyen district (Hai Phong)... The land fund was developed from the period 2010-2015, when land prices in these areas were still relatively low.

Thanks to owning cheap land funds, when there is a move to sell large-scale projects, investors expect to gain extraordinary profits in the reporting period.

For example, at the end of 2021, TDC transferred 5.6 hectares in Hoa Phu ward (Thu Dau Mot city, Binh Duong) to Gamuda Land for about VND 1,250 billion. On January 31, 2022, the Company recorded a deposit of VND 600 billion for the transfer of the Uni Galaxy Project and as of September 30, 2022, this item no longer existed. In addition, in the third quarter of 2022, the Company recorded an increase in revenue of VND 1,282.1 billion, up to VND 1,505.3 billion and a sudden profit of VND 120.4 billion, an increase of VND 119.8 billion. Thus, it is likely that the Company completed the transfer of the Uni Galaxy Project to its partner in the third quarter of 2022 and recorded a sudden profit in the reporting period.

It can be seen that owning a large land fund and low capital cost gives TDC an advantage over its competitors, but due to lack of caution, maintaining high cash dividends leads to low cash accumulation, when business is at a loss, short-term debt exceeds short-term assets. Therefore, to ensure effective exploitation of the land fund, the Company is forced to find new capital or continue to "wholesale" existing land funds to have cash flow.

It is known that at the 2024 General Meeting of Shareholders, Mr. Thuan left open the possibility of cooperating with partners to develop the project. “In 2024, the Company will restructure bank debts, fully repurchase a portion of bonds before maturity, expected to be 300 billion VND. In the real estate sector, we will actively work with domestic and foreign partners to cooperate in investing in project development,” said Mr. Thuan.

Source: https://baodautu.vn/co-phieu-tdc-noi-song-nho-game-tai-co-cau-d220297.html