Billions of stocks "flood" the market: Part 1

After the annual shareholder meeting season, a series of businesses planned to issue large quantities of shares to pay dividends and increase capital with a value of up to billions of USD. At the top of the list are businesses in banking, securities and real estate.

17 billion bank shares launched on stock market

Among the sectors on the stock exchange, the banking group has recorded the most positive moves in issuing additional shares to the market. Up to now, only 3/27 listed banks have not announced plans to issue shares. In the banking sector alone, the number of shares issued to the market this time has reached 17.1 billion shares.

The bank with the highest number of issued shares is Techcombank (stock code: TCB, listed on HOSE) . According to the results of Techcombank's shareholders' meeting, the plan to double its capital (from over VND 35,225 billion to over VND 70,450 billion) was approved through the issuance of shares from equity capital. Accordingly, Techcombank will issue an additional 3.5 billion shares.

Hàng tỷ cổ phiếu — Banking groups simultaneously issue shares (Illustration photo: ST)

The 3 BIG4 banks (the group of 4 largest banks in the Vietnamese market) also plan to issue billions of shares. Specifically, the Industrial and Commercial Bank (VietinBank, stock code: CTG, HOSE) will not issue shares to increase capital but will use all profits in 2023 after setting aside funds to pay dividends in shares. It is estimated that CTG will issue an additional 2.5 billion shares, increasing its charter capital from 53,700 to 79,148 billion VND.

Similarly, the Bank for Foreign Trade of Vietnam (Vietcombank, stock code: VCB, HOSE) also announced a plan to use all remaining profits after deducting funds in 2023 to pay stock dividends to shareholders. Accordingly, VCB will issue an additional 2.17 billion shares.

The General Meeting of Shareholders of the Bank for Investment and Development (BIDV, stock code: BID, HOSE) also approved the Board of Directors' proposal to increase charter capital by VND 13,600 billion in 2024 by issuing 1.36 billion shares through two options: paying dividends and selling to professional securities investors.

In addition, the remaining 20 banks have also announced plans to issue millions of additional shares, such as: Military Bank (MBBank, stock code: MBB, HOSE) issued an additional 858 million shares (increasing capital by VND 8,580 billion), Lien Viet Post Bank (LPBank, stock code: LPB, HOSE) issued 800 million shares (increasing capital by VND 8,000 billion), National Bank (NCB, stock code: NVB, HOSE) issued 620 million shares (increasing capital by VND 6,200 billion)...

Securities companies compete to increase capital

The group of securities companies also plans to increase capital through issuing shares to increase capital sources. The 2024 annual general meeting of shareholders of SSI Securities (stock code: SSI, HOSE) approved the plan to issue 453.2 million shares, including 302.2 million bonus shares and 151 million shares for shareholders. Thanks to this, SSI's charter capital is expected to increase to VND 19,645 billion (an increase of 30% compared to the current capital).

LPBank Securities – LPBS estimates that it will issue an additional 363.8 million shares to increase capital capacity as planned, 15 times higher than the current level (VND 250 billion), up to VND 3,888 billion.

Vietcap Securities (stock code: VCI, HOSE) also presented a plan to issue more than 281 million additional shares at this year's annual general meeting of shareholders held in April, increasing capital through the following forms: issuance to employees (ESOP), private offering and additional issuance to existing shareholders. After completing the above capital increase plans, VCI achieved the goal of increasing its charter capital to over VND7,000 billion (an increase of nearly 64% compared to the current level).

According to analysts, the need to increase capital capacity, even very high in the financial group (banking and securities) with stocks is mainly to expand the scale of operations, gain market share, improve margin lending capacity or self-trading.

Real estate raising capital by stocks

Besides, in the banking and securities industry, many other large enterprises also announced plans to issue large numbers of shares in the near future.

No Va Real Estate Investment Joint Stock Company (Novaland, stock code: NVL, HOSE) announced a plan to issue 1.2 billion shares at the 2024 Annual General Meeting of Shareholders and shareholders approved in writing. The shares will be issued by offering to existing shareholders in the form of purchase rights.

Hoa Phat Group (stock code: HPG, HOSE) announced a bonus share for shareholders at a rate of 10%, equivalent to 581.5 million additional shares issued, helping to increase charter capital to VND63,962 billion.

Increasing capital by issuing shares is considered a legitimate activity, a solution "favored" by many businesses to help expand business, pay debts, invest, etc. in the context of raising capital by bonds facing many difficulties.

A typical case is Phat Dat Real Estate Development Corporation (stock code: PDR, HOSE) . At the end of 2023, PDR completed a private offering of 67.16 million shares at VND10,000/share. Thanks to that, the company successfully raised VND671 billion, paying off all bond debt by the end of 2023.

Recently, the company continued to apply this method to raise capital and was approved by the Securities Commission to offer 134.3 million shares to existing shareholders at VND10,000/share. The expected amount of money raised is VND1,343 billion, used to invest in real estate projects.

In addition, many other businesses from the fields of retail, education, services, raw materials, etc. also announced the issuance of large numbers of shares this year.

However, many experts believe that a large amount of stocks "flooding" into the market is not necessarily favorable, and can even cause pressure on the market.

Furthermore, this also depends on whether the operating context of the industry groups is vibrant enough to help investors earn profits. The increase in the number of shares can also increase the dilution of shares, causing each existing shareholder to have their rights significantly affected.

DNSE Securities has assessed that issuing shares has both positive and negative impacts, affecting shareholders and businesses. Investors need to clearly recognize to have a reasonable and complete solution.

(To be continued)

Source: https://phunuvietnam.vn/hang-ty-co-phieu-do-bo-thi-truong-bai-1-ngan-hang-chung-khoan-bat-dong-san-dau-bang-20240520162715417.htm