The General Meeting of Shareholders of Danh Khoi Group Corporation (HNX: NRC) on June 25 approved a plan to issue 100 million shares at VND10,000/share in 2024 to increase capital to VND1,926 billion.

If successful, with the VND 1,000 billion collected, NRC will spend VND 375 billion to pay for the purchase of part of the Dai Nam Residential Area project and the Ham Thang - Ham Liem Commercial and Service Small-scale Industrial Residential Area, expected to be implemented in the fourth quarter of 2024 and 2025.

Dai Nam Residential Area is invested by Tan Khai Company Limited. Mr. Huynh Uy Dung - tycoon Dung "lime kiln" - is the chairman of the Board of Directors of this company. The project is located right on the frontage of National Highway 13 in Chon Thanh District, Binh Phuoc Province. The project has a total area of ​​over 96 hectares with 2,459 townhouses and villas, 4 kindergartens, 1 high school...

What is the potential of Danh Khoi Group?

Danh Khoi Group Corporation, formerly Netland Real Estate Corporation, was established in 2014, operating mainly in the field of investment cooperation in real estate projects and real estate brokerage.

In 2018, Danh Khoi listed its shares on the Hanoi Stock Exchange (HNX), and just a few years later became one of the leading real estate distributors in the real estate market. Some of the outstanding projects that Danh Khoi distributed are: Lang Sen, Rome (Phuc Khang Corp); Dream Home Riverside (Nha Mo); Nhon Hoi New City, Astral City (Phat Dat), Sky 89, The Song, Signial (An Gia)...

However, in recent years, Danh Khoi has encountered many difficulties.

Danh Khoi Group's revenue has been zero for some quarters, or only 1-2 billion VND.

For the whole year of 2023, NRC's revenue was just over 4.6 billion VND. NRC's stock price since the end of 2022 has only hovered around below 5,000 VND/share.

The capitalization scale as of June 27 was only 435 billion VND. By the end of the first quarter of 2024, NRC's total assets were more than 2,000 billion VND, of which total debt was more than 743 billion VND and equity was nearly 1,300 billion VND.

This enterprise experienced many quarters of losses, only returning to thin profits from the third quarter of 2023. In 2022, NRC lost more than 72 billion VND, and in 2023, it made a profit of nearly 12 billion VND.

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Danh Khoi participates in many real estate projects. (Photo: NRC)

The majority of Danh Khoi's assets are short-term and long-term receivables amounting to VND1,680 billion at the end of the first quarter of 2024. NRC's equity is quite large, thereby making the book value of each NRC share reach about VND14,000 (compared to VND4,700 billion on June 27).

Receivables consist mainly of deposits for this group to broker some projects such as: Nhon Hoi Eco-tourism Urban Area, Tan Lap Islet Residential Area,... and receivables according to cooperation agreements at Astral City 1 project; deposits to participate in the development of high-rise apartment projects in Binh Duong.

The worrying thing is that Danh Khoi's revenue is very low, and business activities are often almost stagnant. NRC has not been able to promote the distribution of real estate products.

This enterprise's cash and cash equivalents are very little, only 554 billion VND as of the end of the first quarter of 2024. Meanwhile, interest expenses and business management costs still consume NRC's money.

At the end of 2023, Danh Khoi was stopped from using invoices by the District 1 Tax Department (HCMC) due to a tax debt of nearly VND 100 billion. Previously, in November 2022, the company was also similarly punished.

Regarding the feasibility of raising additional capital and M&A of real estate projects, at the General Meeting of Shareholders, NRC Chairman Le Thong Nhat said that the purchase of a part of the Dai Nam Residential Area project is only a plan. The company is also looking for other suitable projects.

This is part of the merger and acquisition (M&A) strategy that NRC Chairman Le Thong Nhat's company wants to implement to continue restructuring its investment portfolio, promote the development of promising projects and products, and expand its scope of operations.

But NRC believes in its plan to issue 100 million shares privately to professional securities investors to raise VND1,000 billion, at a price more than double the current market price. This plan is very carefully prepared, preliminary results of discussions with some partners show that about 40% of the offering plan has been implemented.

Mr. Dung 'lime kiln' has just released the mortgage on 220 plots of land in Dai Nam Residential Area . The enterprise of tycoon Huynh Uy Dung has released the mortgage on 220 plots of land in Dai Nam Residential Area project. Some other investors have also just mortgaged all or part of the project to the bank.
According to the Ministry of Finance, through inspection, 19 real estate enterprises have proposed to handle financial debts of more than 1,400 billion VND. By the end of 2023, there are still some "big guys" such as Handico who owe more than 731.8 billion VND.