Saigonres (SGR) at risk of breaking its annual plan, selling 20 million shares to the Chairman to get money to pay off debt

Saigonres (SGR) issues 20 million shares to Chairman of the Board of Directors

Recently, Saigon Real Estate Corporation - Saigonres (Code: SGR) approved to collect shareholders' opinions in writing on two contents: electing additional members of the Board of Directors and a plan to mobilize capital through private issuance.

Specifically, Saigonres dismissed Mr. Kiem Minh Long from his position as an independent member of the Board of Directors and elected Ms. Nguyen Thi Kim Quyen to the position of a member of the Board of Directors.

saigonres sgr risk of losing plan to sell 20 million shares to get money to pay debt image 1 — Saigonres (SGR) suffered a loss in the first half of 2024, with a high risk of breaking the 2024 business plan (Photo TL)

Notably, the plan to issue individual shares with a quantity of up to 20 million shares. The issuance value is 40,000 VND/share, equivalent to the current market price of SGR code. The newly issued shares will be transferred to Chairman of the Board of Directors Pham Thu, and will be restricted from transfer for 1 year.

If the issuance is successful, SGR expects to collect VND800 billion. The company will use VND500 billion to invest in the "Viet Xanh Eco-Urban Area" project and the remaining VND300 billion to pay off due loans.

At the same time, after the transaction, Mr. Pham Thu will increase his ownership from 17.96 million shares to 37.96 million shares, equivalent to 47.45% of charter capital.

Regarding the Viet Xanh Eco-Urban Area project, this is a project invested by Saigon Hoa Binh Real Estate Company Limited, a subsidiary of Saigonres. The project is located in Tan Vinh commune, Luong Son district, Hoa Binh province with a scale of 49.92 hectares, total investment capital of 833 billion VND.

Losses in the first half of 2024, SGR finds it difficult to complete the year plan

Regarding business activities, in the first 6 months of the year, Saigonres recorded total revenue of 60.2 billion VND, double that of the same period. Gross profit reached 25.4 billion VND, 3 times higher than the result in 2023.

However, financial revenue dropped sharply from 49.7 billion to just over 3 billion VND. Meanwhile, financial expenses were increased to over 4 billion VND, accounting for 17.7 billion. Most of which was interest expense, showing that the pressure from the company's loans was increasing.

Business management costs also increased from VND7.9 billion to VND33.1 billion. This additional cost pushed Saigonres to a loss of VND22.7 billion. After deducting taxes and other expenses, SGR reported a loss of VND23.4 billion while in the same period it was still making a profit of VND31 billion.

Explaining the above business results, Saigonres said that business management costs increased sharply because the company had to set aside provisions for receivables as requested by the auditor.

In 2024, SGR set a business target of VND190 billion in pre-tax profit for the year. With a loss of more than VND20 billion in the first 6 months of the year, SGR is almost certain to break its annual business plan.

Liabilities overwhelm equity

Regarding Saigonres' asset structure, at the end of the second quarter of 2024, the company recorded total assets of VND 2,094.1 billion. Of which, cash and cash equivalents accounted for VND 79.7 billion.

Short-term receivables currently account for VND936.3 billion, showing that nearly half of Saigonres' assets are "on paper". In addition, inventories also account for VND519.6 billion, down from the same period last year.

Regarding capital structure, liabilities are also tending to overwhelm equity. Liabilities account for VND 1,202.2 billion, equivalent to 57.4% of total capital.

Of which, the company is borrowing short-term debt of VND311 billion and long-term debt of VND96.6 billion. Owner's equity currently accounts for only VND892 billion with undistributed profit after tax accounting for about VND254.4 billion.

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