The SGR stock price of Saigon Real Estate Corporation (Saigonres) suddenly increased by 74.6% as investors expected signs of improvement from existing projects that could soon re-evaluate the clean land fund of up to 1 million square meters.
SGR stock goes against the market trend
In the context of a volatile market, fluctuating within a narrow range, from May 21 to August 23, Saigonres' SGR shares jumped 74.6%, from VND21,300 to VND37,200/share, becoming a hot phenomenon on the HoSE floor.
It is worth noting that the increase in SGR shares occurred in the context of Saigonres's business operations remaining difficult. In the first half of 2024, although Saigonres recorded a revenue increase of 240.9%, to VND 1,645 billion, its profit decreased by 92.3%, to VND 2.39 billion and only completed 2% of the annual plan.
Previously, at the General Meeting of Shareholders at the beginning of the year, although introducing the company as preparing to implement and applying for licenses for 26 projects spanning from Mong Cai, Quang Ninh, Phu Quoc..., with a clean land fund of more than 1 million m2, Chairman of the Board of Directors Pham Thu still worried about capital sources with shareholders.
According to Mr. Pham Thu, the capital problem to complete the project is extremely difficult. Saigonres has many difficulties that seem insurmountable, the bank loan is very small but the compensation value for each project is very large, dividends must be paid on time to shareholders... The most difficult thing is that the company's capital is too small compared to the existing projects, because the investor's capital must account for at least 20% of each project according to regulations.
“After 2025, the Company aims to have equity of over VND2,500 billion. Currently, if shares are issued plus retained earnings, the Company will have equity of about VND1,500 billion,” Mr. Thu emphasized.
However, in fact, in the first half of 2024, Saigonres' charter capital was still VND 600 billion, equity remained flat at VND 918 billion and total debt increased by only VND 57.6 billion, to VND 407.6 billion, accounting for 44.4% of equity.
In addition, bidding units are being closely monitored following problems arising in the real estate market.
Capital mobilization shows no signs of improvement
In contrast to the unpromising business situation, Saigonres continuously announced positive information about new projects. In particular, Saigonres has owned 2,655 m2 of land at 12/10 Tran Nao, An Khanh Ward, Thu Duc City, Ho Chi Minh City; Binh Duong Provincial People's Committee has approved Saigonres's member unit, Saigon Real Estate Trading Company Limited, to invest in the Saigon An Phu Residential Area Project (in Binh Duong) with an area of 10,000 m2, providing 66 townhouses and shophouses with an area of 80 m2; Saigon Thai Nguyen Joint Venture (Saigonres, DIC Corp and Hung Thinh Incons) is the only investor registered to implement the Nam Tien 2 Urban Area Project with a scale of 352,862 m2, with a total investment capital of VND 3,825 billion.
In fact, Saigonres has been facing difficulties in investment disbursement for many years. In particular, on average, in the 4 years from 2020 to 2023, the actual disbursement rate only reached about 18.7% compared to the plan. Entering 2024, Saigonres once again planned to increase the total investment capital by 100% compared to the actual disbursement in 2023, corresponding to an increase of 482.5 billion VND, to 1,645 billion VND.
The slow disbursement has caused the projects that the company is implementing to show signs of capital increase over time. From 2020 to 2023, the Viet Xanh - Hoa Binh Ecological Urban Area Project increased its investment capital by VND 904.42 billion, up to VND 1,300 billion; the Van Lam - Binh Thuan Residential Area Project increased its investment capital by VND 41.5 billion, up to VND 360 billion; the Phu Dinh Riverside Apartment - Commercial Area Project increased its investment capital by VND 10 billion, up to VND 240 billion...
Many other projects also increased their investment capital due to slow investment implementation, increased compensation costs for site clearance, and increased construction costs. The increased investment capital puts significant financial pressure on Saigonres in 2024, when the investment demand is expected to reach VND1,645 billion. Meanwhile, at the end of the second quarter of 2024, Saigonres' cash fund was only VND92.03 billion, equivalent to 4.4% of total assets.
It is known that in 2024, Saigonres will continue to work with banks and credit institutions to basically complete the bond issuance plan and seek capital sources for investment. In addition, the Company will deploy business on land plots that are not used for projects and remaining products of projects to recover capital for investment and actively urge debt collection from partners.
It can be seen that SGR stock price is in contrast to the business situation, investors expect new moves in some projects that Saigonres invests in, thereby helping to increase stock valuation.
SGR stock valuation is no longer attractive
Data on iBoard of SSI Securities Company shows that, as of the end of August 2024, SGR shares were trading at a P/E valuation of 21.63 times (industry average 16.19 times) and P/B of 1.85 times (industry average 1.21 times). It is known that in the past, SGR shares were often traded at P/E valuations ranging from 2.26 times to 11.27 times.
According to technical analysis, SGR stock is trading at the RSI (an indicator used to measure the overbought or oversold state of the market) of 78 points, greater than 70 points and in the overbought zone. Thus, SGR stock is no longer cheap, the stock is trading at the overbought zone. This is a warning signal for investors to be cautious before the recent unexpected increase in the stock.
Source: https://baodautu.vn/giai-ma-suc-nong-co-phieu-cua-saigonres-d223414.html
Comment (0)