When the financial health improved positively, GEX continuously attracts foreign funds to buy its shares

One of the remarkable movements in the securities market last week was that the group of foreign investors continued to simultaneously buy more GEX shares, thereby raising the level of ownership to become a major shareholder in this enterprise.

The group of foreign funds continuously bought GEX shares and GEX returned to the position of a major shareholder

Specifically, according to the information disclosure from Gelex Group Joint Stock Company to the State Securities Commission and Ho Chi Minh City Stock Exchange (HOSE), on December 5, the foreign fund group Dragon Capital continued to buy 3 million more GEX shares to increase its ownership from 5.68% to 6.03% of charter capital in Gelex. To be specific, Grinling International Limited bought 2 million shares and Vietnam Enterprise Investments Limited bought 1 million shares, increasing their ownership by 0.73% and 1.9% respectively, increasing the ownership rate of this group of foreign funds in GEX from 5.68% to 6.03% of charter capital.

Based on the trading price of GEX shares at VND 16,200/share on December 5 (trade date), with this purchase, it is estimated that Dragon Capital group spent a total amount of about VND 48.6 billion to buy 3 million GEX shares.

Previously, on November 18, Dragon Capital group reduced its ownership rate from 5.3% to 4.69% of charter capital and was no longer a major shareholder when selling 5.2 million GEX shares. To be specific, Vietnam Enterprise Investments Limited sold 3 million shares; Amersham Industries Limited sold 2 million shares; Samsung Vietnam Securities Master Investment Trust (Equity) sold 0.2 million shares. However, shortly afterward, on November 29, the fund group related to Dragon Capital bought back 5,156,900 shares of GEX, raising its ownership level from 4.74% to 5.34% of charter capital and returning to the position of a major shareholder in Gelex. Specifically, Amersham Industries Limited fund bought 4,156,900 shares to raise its ownership rate from 0.83% to 1.32% of charter capital; Vietnam Enterprise Investments Limited fund bought 1 million shares to raise its ownership rate from 1.77% to 1.88% of charter capital.

The continuous adjustment of selling-purchase of foreign funds for GEX shares is considered a positive move when these groups of investors recognized the positive growth potential and rapid recovery prospects of Gelex’s core investment areas, combined with the picture of increasingly improving financial stability. It is remarkable that the Dragon Capital fund group is a companion for a long time with Gelex when holding a large number of shares of this Company for a long time in the investment portfolio.

Positive financial and cash flow health improvement

A move also noticed by investors is that Gelex announced buying back 777 TP.GEX.2020.01 bonds with a par value of VND 100 million / pre-maturity bond, equivalent to VND 77.7 billion. The total issuance value of this bond code is VND 300 billion, currently, and the remaining amount in circulation is VND 77.7 billion, equivalent to the entire amount of Gelex bonds expected to be bought back. TP.GEX.2020.01 bonds were issued on May 13, 2020, and matured on May 13, 2023, with a fixed interest rate of 9.5%/year.

Gelex has also approved the plan to buy back the bond lot GEXH2124002 worth VND 200 billion out of the total value of VND 1,000 billion of code bonds in circulation. The expected time to buy back is December 23, 2022. Bond GEXH2124002 was issued on December 23, 2021 and matured on December 23, 2024, with a fixed interest rate of 8.5%/year, and a total par value of the issue is VND 1,000 billion. After a successful purchase, the bond lot GEXH2124002 will have the remaining VND 800 billion of circulating value. With the early redemption of the above 2 bonds, Gelex will complete the purchase of a total value of VND 277.7 billion of issued bonds.

This is a move to the continuous repurchase of pre-maturity bonds from May 19 to July 25. It is estimated that by the end of July 2022, Gelex bought back a total of VND 1,627.2 billion of pre-maturity bonds, strictly following the plan mentioned by the Gelex Board of Directors at the 2022 General Meeting of Shareholders, which is to be ready to conduct repurchase of pre-maturity bonds to reduce debt on bond debt when it is due or at the request of bondholders, contributing to promoting stability in enterprises’ financial health.

By the end of the third quarter of 2022, Gelex’s cash flow and financial situation had more positive changes. Liabilities dropped sharply by 19% to VND 32,961 billion, of which loans and finance leases decreased by 20% to VND 17,624 billion. By proactively reducing payables, debt and bond debt, Gelex’s management board is expected to significantly cut financial costs in the context that interest rates still tend to increase sharply. This helps to improve Gelex’s financial stability more sustainably, as demonstrated by its debt and liquidity ratios.

As announced by Gelex, as of December 31, 2021, the net debt/EBITDA ratio is 1.8 times, compared with the standards of financial institutions when considering credit up to about 3.5 times. The ratio of short-term properties/short-term liabilities is about 1.3 times, and total debt/equity is about 1. With continuous high growth in business results in the 3 quarters of 2022, the financial capacity is strengthened, and the early final bonds settlement helps to sharply reduce debts, thereby reducing financial costs for Gelex, bringing the debt ratio of the business to continue to move in the positive and right direction that Gelex’s management board set at the 2022 General Meeting of Shareholders.

In the third quarter of 2022, Gelex recorded the net revenue of VND 7,014 billion, an increase of 16% over the same period last year, while profit before tax reached VND 282 billion, down by 30% compared to the same period last year. The structure of net revenue in the third quarter mainly came from the electrical equipment segment with VND 3,339 billion. All of Gelex’s other business segments’ revenue have grown, contributing to the revenue structure, of which building materials reached VND 2,611 billion, real estate and industrial parks was VND 628 billion, and energy and clean water was VND 362 billion. With this result, in the first 9 months of the year, Gelex’s total consolidated net revenue was VND 24,729 billion, and consolidated profit before tax reached VND 1,767 billion, increasing by 29% and 25% respectively over the same period in 2021.

In 2022, GELEX set a target of VND 36,000 billion in revenue and VND 2,618 billion in consolidated profit before tax, increasing by 26% and 27% respectively compared to 2021. Thus, at the end of 9 months, GELEX completed 69% of the revenue target and 68% of the targeted profit before tax for the whole year.

Meanwhile, on December 09, GELEX issued a notice to internal stock trading. Accordingly, GEX Investment One Member Limited Company registered to sell 80 million GEX stocks, equivalent to 9.39% of the total outstanding stocks of this Group. Transactions would be made by order matching or agreement from December 14, 2022 to January 12, 2023. The expected transaction value (calculated at par value) is VND 800 billion. The registration to sell a large number of stocks of the enterprise is to structure the investment portfolio.

According to Hieu Phuong – Economic forecast magazine