Ho Chi Minh City Infrastructure Investment (CII) sells subsidiary, pays 500 billion VND in interest

Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII) must sell nearly all 31.8 million treasury shares.

Last April, Ho Chi Minh City Infrastructure Investment Corporation struggled to call on shareholders to attend the General Meeting of Shareholders. Although it had planned to give money to shareholders attending the meeting, the first meeting still failed with only 45.76% of the total voting shares attending. In the second General Meeting of Shareholders in May, the Board of Directors passed a Resolution approving the sale of almost all 31.8 million treasury shares that the company was holding.

Previously, from January 24, 2022 to February 22, 2022, the company also registered to sell 44 million treasury shares, but because the market price did not reach the expected level, it was only able to sell 3.5 million shares at an average price of about VND 35,000/share. From March 22, 2022 to April 6, 2022, CII successfully registered to sell 9 million treasury shares at an average price of VND 32,222/share.

Every day, the 56 billion investment in infrastructure technology in Ho Chi Minh City must continue to sell its subsidiary company, image 1. — After selling treasury stocks, Ho Chi Minh City Infrastructure Investment has to sell its subsidiary SII (Photo TL)

With this plan to sell treasury shares, CII sold 31.8 million treasury shares, equivalent to 12.6% of the number of shares outstanding on the market. CII's first quarter 2023 financial statements show that the company recorded the value of these treasury shares at VND 737 billion, equivalent to a price of VND 23,180/share.

In the trading session on June 21, 2023, CII shares were only priced at VND 18,550/share. Thus, with the decision to sell treasury shares at this time, CII is expected to record a loss.

Just after planning to sell all treasury shares, CII had to divest all 32 million shares at subsidiary SII.

After issuing a resolution to sell almost all treasury shares, CII is also registering to sell 32.66 million shares of Saigon Water Infrastructure JSC (SII) with the aim of balancing the company's finances.

Specifically, the transaction is registered to be carried out from June 6, 2023 to July 5, 2023 by negotiation or order matching. The above amount of shares is equivalent to 50.62% of shares in Saigon Water Infrastructure. Thus, after the above transaction, CII will no longer hold shares in subsidiary SII.

SII stock price in the trading session on June 21, 2023 is at VND 20,900/share. Thus, it is estimated that CII will earn about VND 683 billion from the divestment of this subsidiary.

The move to sell treasury shares and divest from its subsidiary shows that CII is having to focus its financial resources on its business activities. Previously, the company's Board of Directors also approved a decision to guarantee a medium- and long-term loan with a total value of VND2,398 billion for the BOT project to expand Hanoi Highway and National Highway 1 from the old Station 2 intersection to Tan Van intersection.

First quarter profit decreased by 99%, average daily interest payment of 5.6 billion VND

CII’s business performance in the first quarter showed a rather bleak picture. Specifically, the company achieved net revenue of VND748 billion, up 5% year-on-year. However, after-tax profit was only over VND7 billion, down 99% year-on-year.

According to the company's explanation, the company's profits plummeted in the first quarter due to the lack of profits from divesting subsidiaries. The divestments from subsidiaries helped CII record a sudden financial revenue of up to 776 billion VND in the first quarter of 2022.

However, compared with the target set for 2023, by the end of the first quarter, CII had only completed 15% of the revenue target and 2% of the yearly profit plan.

By the end of the first quarter of 2023, CII's total assets reached VND 29,006 billion. Notably, liabilities accounted for VND 20,667 billion, equivalent to 71.2% of total assets.

The company's short-term debt tends to increase very rapidly during the period, from VND 5,166 billion to VND 6,460 billion, corresponding to the short-term debt increasing to VND 1,294 billion in just the first 3 months of the year.

On the contrary, the company's long-term financial leasing debt and borrowing target decreased from VND9,416 billion to only VND8,772 billion. The total amount that CII is borrowing has reached VND15,232 billion, nearly double the owner's equity.

With such large debts, it is not difficult to understand why CII's operating cash flow in the first quarter is negative at 147 billion VND. On the company's cash flow statement, it is also easy to see that the company's interest payments amounted to 508 billion VND in the first quarter alone. Thus, it is estimated that each day, CII's interest payments alone amount to more than 5.6 billion VND.

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