Continuing the decade-long journey of debt reduction

At the beginning of the new year 2024, Hoang Anh Gia Lai - HAGL Joint Stock Company (HAG), chaired by Mr. Doan Nguyen Duc (Bau Duc), registered 13.31 million HNG shares of Hoang Anh Gia Lai - HAGL Agrico International Agricultural Joint Stock Company (HNG) in the period from January 9 to February 7. The purpose of selling is to pay off BIDV Bank's bond debt.

The transaction is expected to be favorable in the context of HAGL Agrico shares recently increasing strongly and attracting quite a large cash flow.

In the last 10 trading sessions, HAGL Agrico shares of billionaire Tran Ba ​​Duong Thaco increased up to 8 sessions, of which 4 sessions increased to the ceiling. HNG shares broke out from 3,600 VND in mid-December 2023 to 5,250 VND/share in the early morning of January 5, equivalent to an increase of 46% within 3 weeks.

If the sale is successful, Hoang Anh Gia Lai of Bau Duc can earn an additional 70 billion VND. After the transaction, HAGL will still have more than 91 million HNG shares (equivalent to 8.24%). This is also a source that can help HAGL continue to restructure debt when needed.

Over the past decade, Mr. Duc's Hoang Anh Gia Lai has been struggling to reduce the huge debt of tens of thousands of billions of dong that was formed during the process of large investments in agriculture, including rubber in Indochina, but has failed due to the plummeting price of rubber latex.

2023 is a year for Hoang Anh Gia Lai to thoroughly deal with its debt since HAGL Agrico entered into a strategic partnership with Thaco in 2018. Tens of thousands of billions of dong from Mr. Tran Ba ​​Duong's Thaco have helped Mr. Duc's business escape bankruptcy.

Most recently, in the last days of 2023, HAGL decided to transfer all 2.75 million shares it holds at Bapi Hoang Anh Gia Lai JSC. This is a banana-eating pig brand launched in 2022.

During the 10-year period from 2013 to now, 2023 is the year that Mr. Duc's HAGL is determined to reduce debt the most, beautifying the financial report after a difficult decade. This move takes place in the context that HAGL has a major strategic investor, LPBank of Mr. Nguyen Duc Thuy (Mr. Thuy) and LPBS Securities.

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One of the turning points for HAGL to try to escape from difficulties is to cooperate with Mr. Tran Ba ​​Duong's Thaco.

On December 27, Bau Duc's company decided to sell the University of Medicine and Pharmacy Hospital - Hoang Anh Gia Lai to continue restructuring its debt, fulfilling its commitment to be debt-free in the next few years. Accordingly, the Board of Directors approved the transfer of all 9.9 million shares (equivalent to 99%) of charter capital at the University of Medicine and Pharmacy Hospital Joint Stock Company - Hoang Anh Gia Lai to repay the principal of 2016 bonds. The University of Medicine and Pharmacy Hospital - HAGL was established in 2011, in Pleiku city (Gia Lai) with an initial investment capital of 250 billion VND.

Previously, in the third quarter of 2023, HAGL also sold Hoang Anh Gia Lai Hotel, earning 180 billion VND, to repay HAGL bonds issued in 2016 to the Vietnam Joint Stock Commercial Bank for Investment and Development (BIDV).

Waiting for the effectiveness of the "breakthrough formula"

The fact that HAGL of Mr. Duc is rushing to sell assets is to pay off and is expected to be debt-free in the next few years as committed by this football boss. The signal is also quite positive when the debt is decreasing rapidly and the HAGL boss has a big companion, Mr. Thuy - Chairman of the emerging bank LPBank.

Previously, in 2018, HAGL recorded financial debt of up to VND28,000 billion. By the end of the third quarter of 2023, the company still owed about VND7,778 billion. This figure will be even lower if calculated by the end of 2023 after recent debt repayments.

It can be seen that determination has helped HAGL pay off most of the debt that was previously formed. The money collected through the sale of HAGL Agrico shares as well as the sale of HAGL's assets has helped Bau Duc's enterprise reduce its debt burden.

In addition, the business's cash flow signal has brightened again after Mr. Duc's HAGL found a breakthrough business formula: growing durian trees with 1 capital and 4 profits on the strength of the business's large land area.

Some forecasts say that Mr. Duc's HAGL may return to a profit of thousands of billions per year.

Recently, a piece of information that helped HAG shares skyrocket was Eximbank reducing the interest debt by more than 1,400 billion for Gia Lai Livestock Joint Stock Company - a subsidiary of HAGL. With this move, HAGL will be included in the profit in 2023, thereby the estimated profit for the whole year will reach 2,150 billion VND, double the plan.

Mr. Duc will focus his money on growing durian trees - a fruit that will have a very high selling price in 2023, up to hundreds of thousands of VND/kg thanks to favorable exports to China. It is estimated that by 2025, the Chinese durian market could reach 20 billion USD.

With a yield of about 25 tons/ha and a high price of sometimes up to 200,000 VND/kg, each hectare of durian can bring growers several billion VND in profit.

According to HAGL, in the first durian harvest in the third quarter of 2023, the company earned 18 billion VND while only investing 3.6 billion VND. HAG's durian area is up to 1,200 hectares, but in 2023, it will only harvest a few dozen hectares.

In 2024, HAGL's durian will be harvested on a large scale. About 700 hectares will be harvested in the fourth quarter of 2024, contributing to HAG's profit of about 2,000 billion VND. By 2026, HAGL's durian growing area will be 2,000 hectares, of which 1,000 hectares will be harvested. HAGL also has 5,000 hectares that can grow more durian.

With profits increasing dramatically and reaching a threshold of several thousand billion VND/year, the ability to pay off all debts in 2026 as Mr. Duc shared is considered feasible. Asset sales also contribute to faster debt restructuring. In addition, the plan to sell 130 million shares is expected to also bring in thousands of billions for HAGL.

Along with debt settlement, Bau Duc's company shares have increased sharply by nearly 70% since the beginning of November, from 8,000 VND/share to 13,300 VND/share as at present.

The breakthrough for more than 2 consecutive months has brought HAG stock price to a 3-year peak. Profit-taking pressure has also appeared quite strongly. However, many people still bet on the fluctuations of this stock after HAGL signed a comprehensive cooperation agreement with LPBank of Mr. Thuy.

Many people believe that a sustainable agricultural empire will emerge when Mr. Duc is in his twilight years. After many ups and downs, HAGL has gone from being a big player in the real estate sector to hydropower and then rubber. Now, HAGL may focus more on its strength of durian after a decade of managing by Mr. Duc.

Mr. Duc wants to continue selling the banana-eating pig chain . Hoang Anh Gia Lai has just decided to divest all its capital from the company specializing in distributing products from banana-eating pigs. It is expected that Mr. Duc's business will earn more than 20 billion VND.