Duc Long Gia Lai wants to divest all capital from its foreign subsidiaries

Duc Long Gia Lai has decided to divest all 97.73% of its capital holding in Mass Noble - an electronic components manufacturing company registered in the Virgin Islands.

Duc Long Gia Lai Group Joint Stock Company (stock code: DLG) has just announced the Board of Directors' resolution on approving the restructuring of capital investment at Mass Noble Investments Limited Company.

Accordingly, Duc Long Gia Lai wants to sell all 97.73% of its capital (equivalent to an investment of VND 249 billion) it owns at Mass Noble. The company authorized the General Director to find a unit to appraise the value of this investment in accordance with the current situation, and at the same time find a partner to transfer it with the condition that the price is not lower than the face value and ownership value of the group at Mass Noble.

Mass Noble is headquartered in the Virgin Islands. This company became a member of Duc Long Gia Lai in May 2015 through a stock swap. At that time, Duc Long Gia Lai issued nearly 20 million shares to existing shareholders of Mass Noble at a swap price of VND12,500 per share.

Mass Noble operates mainly in the field of manufacturing high-tech telecommunications components and electronic equipment with a factory located in Guangdong (China). This company plays an important role in the business results of Duc Long Gia Lai.

Specifically, according to the 2023 annual report, Mass Noble recorded revenue of more than VND 573 billion, contributing 51% to the group's total revenue. However, Mass Noble reported a pre-tax loss of VND 78 billion, while in the same period last year it lost more than VND 113 billion. Total assets as of the end of last year reached more than VND 412 billion, a slight decrease compared to VND 456 billion at the beginning of the period.

The plan to divest from Mass Noble was announced by Duc Long Gia Lai in the context that the group is facing many difficulties due to two consecutive years of losses. In 2022, it lost 578 billion VND and in 2023, it lost 1,197 billion VND.

After announcing a loss in business results and short-term debt exceeding short-term assets, Duc Long Gia Lai was questioned by auditors about its ability to continue operations. However, the board of directors affirmed that the production and business situation is still operating stably and has many flexible solutions according to market fluctuations such as restructuring the financial situation, increasing debt collection, cutting costs to reduce bank loans.

According to the plan submitted to the shareholders' meeting, Duc Long Gia Lai aims to achieve revenue of VND1,400 billion and after-tax profit of VND120 billion this year. If achieved, the group will avoid delisting due to three consecutive years of losses.

According to the financial report for the first quarter of 2024, the group recorded net revenue of more than VND 266 billion, an increase of 20% (equivalent to VND 44 billion) over the same period. Profit after tax reached more than VND 35 billion, 5 times higher than VND 6.9 billion in 2023.

In the longer term plan, the group expects revenue in 2025 to reach VND1,550 billion and profit of VND170 billion. The target for 2026 is revenue of VND1,700 billion and net profit of VND250 billion.

The Board of Directors said that the main goal this year is to restructure strategic industries by focusing on areas with experience, strengths and good cash flow. The areas expected to grow well and invite cooperation are infrastructure, green energy, and resort hotels. On the contrary, the group will divest from ineffective investment industries. Financially, the group expects to pay off all debts of over VND1,000 billion by the end of 2025 and accumulate funds to develop new projects.

On the stock exchange, DLG's market price is at 1,980 VND/share. Compared to the price at the beginning of the year (2,470 VND), this stock has decreased by more than 20%. The average matched volume in the last 10 sessions is about 470,000 units.

Source: https://baodautu.vn/duc-long-gia-lai-muon-thoai-sach-von-cong-ty-con-o-nuoc-ngoai-d220125.html