Mercedes-Benz car distributor plans to increase capital to VND1,074 billion

Hang Xanh Auto Service Joint Stock Company (Haxaco) plans to submit to shareholders a plan to pay an 18% dividend, of which 3% is in cash and 15% is in shares, thereby increasing its charter capital from VND934 billion to VND1,074 billion.

According to the documents of the 2024 annual general meeting of shareholders, the board of directors of Hang Xanh Auto Service Joint Stock Company (Haxaco, stock code: HAX) presented to shareholders a plan to pay dividends and increase share capital from equity.

Specifically, Haxaco's board of directors said that the after-tax profit that can be distributed according to the consolidated financial statements as of December 31, 2023 is VND 150 billion and the capital surplus is more than VND 30.5 billion. The company plans to pay dividends and increase capital at a total rate of 18%. Of which, the cash dividend is 3%, meaning that shareholders owning 1 share will receive VND 300. The total amount of money used to pay dividends is VND 28 billion. In addition, Haxaco plans to issue more than 14 million shares, equivalent to the par value of VND 140 billion, to increase charter capital from VND 934 billion to VND 1,074 billion. The company will issue at a rate of 15%, meaning that shareholders owning 1 share will have 1 right to receive additional shares and for every 100 rights to receive additional shares, they will receive 15 new shares.

After distributing profits, Haxaco plans to retain 12.5 billion VND in profits to transfer to next year.

In an analysis report earlier this year, SSI Research expected Haxaco's sales to increase more strongly in 2024, with lower interest expenses due to reduced current inventories and the subsidiaries (car dealerships distributing the MG and VinFast brands) starting to make a profit. The analysis team gave an expected profit of VND96 billion.

“We assess that the market will still be difficult in the first half of 2024 due to weak consumer demand and buyers' waiting mentality for new car models, but overall in 2024 the market will see a recovery in both quantity and value (thanks to the economic recovery in the second half of the year, new car models launched, the shortage of chips for cars being resolved, as well as more attractive lending interest rates compared to 2023),” SSI Research's report wrote.

In 2023, Haxaco had a revenue of VND3,981 billion, down 41% compared to the previous year. This included VND3,442 billion in revenue from vehicle sales, VND515 billion in revenue from repair services and spare parts sales. After deducting expenses, the company reported a pre-tax profit of VND48 billion and an after-tax profit of VND37 billion, only 15% compared to the previous year. This is the lowest profit since 2015 of the first authorized distributor of Mercedes-Benz in Vietnam. This result is also far lower than the pre-tax profit of VND310 billion set by the board of directors.

In a document explaining business results to the Ho Chi Minh City Stock Exchange, Mr. Do Tien Dung, Chairman of the Board of Directors of Haxaco, said that 2023 brings many economic challenges to many sectors, especially the automobile business. Revenue decreased by double digits while fixed costs remained the same as the previous year, which is the reason for the strong fluctuations in profits.

“Haxaco's management has succeeded in maintaining profits and overcoming the current economic difficulties,” Mr. Dung wrote.

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