Housing developer Nam Long Investment Corporation (HOSE: NLG) approved a plan at its general meeting held over the weekend to auction off as many as 40 million shares, equivalent to 21.2 per cent of its outstanding shares, to raise capital. The plan, which received support from about 80 per cent of its shareholders, has made the group the first listed firm in the country to raise capital by a share auction.
The auction is widely open for domestic and international investors who are keen on NLG stock.
The starting price is set at VND22,300 (98 US cents) per share, equal to 120 per cent of its book value as of the end of 2017.
The group’s board of directors set the bidding price at 30 per cent of the average opening price of NLG stock in the last 60 trading days on the southern bourse.
NLG stock closed at VND40,600 on Friday, down nearly 0.5 per cent from the day before.
Nguyen Thanh Huong, Investment and IR director of the group, told the general meeting that the share auction was meant for shareholders’ best interest as they would be the ones who decided the winning price. Meanwhile in private offering, the selling price of shares is set by the issuer.
“The auction is a way to find the best price for the company’s shares in a fair way. And with it, the door is open for both existing shareholders and new investors.
“The company strongly believes in the success of the auction as it is expected high revenue and profit growth rates from now to 2020,” she said.
Nam Long is expected to raise as much as VNĐ1 trillion from the auction. The money will be used for its existing projects as well as buying land in HCM City and Hà Nội.
It will resume the Water Point Long An project this year. Covering an area of 355 hectares, the project is expected to be a model urban area of the province and serve as a gateway between HCM City and provinces in the Mekong Delta.
The group now still has a land bank of 399ha and aims to buy around 20-25ha in big cities to develop more strategic product lines under the brand name of Ehome, Flora, and Valora.
It also plans to build more facilities for its housing projects such as kindergarten, schools, shopping malls to generate more stable income, which it expects to reach $5 million by 2022.
In the long run, return from this investment is expected to account for 30 per cent of its profit by 2030.
Nam Long reported a post-tax profit of VND756 billion last year, nearly double the amount in 2016, beating the yearly target by 15 per cent.
Its net profit attributable to the shareholders was VND535 billion, up 55 per cent from 2016.
NLG stock enjoyed a robust year in 2017 as its value has gone up by 35 percentage points and its EPS was up 53 per cent.
As of the end of last year, the group’s total asset was worth VND7.9 trillion, up VND1.7 trillion from the beginning of the year.
At the general meeting, Nam Long set a revenue target of more than VND3.8 trillion and a net profit of VND614 billion, up 22 per cent and 15 per cent respectively compared with 2017.