Stopping the issuance of 152 million shares, how does Hai Phat Invest (HPX) deal with the trillion-dollar debt?

Hai Phat Invest must stop issuing 152 million shares

Hai Phat Investment Joint Stock Company (Hai Phat Invest - Code: HPX) has approved a plan to issue 152 million shares to existing shareholders. The issuance ratio is 2:1, equivalent to each shareholder owning 2 shares will be able to buy 1 newly issued share.

The par value of the newly issued shares is 10,000 VND/share, expected to raise 1,520 billion VND and increase the company's charter capital to 4,562 billion VND. The amount raised will be used by Hai Phat Invest to pay off bonds and bank loans due in the third and fourth quarters of this year.

How will Hai Phat Invest (HPX) deal with the trillion-dollar debt?

However, the above issuance plan has been suspended due to unfavorable stock price movements. Specifically, since the issuance plan was announced in June 2024, HPX's stock price has decreased by more than 25% to VND 5,100/share in the session on September 24, 2024.

Compared to the market price, the par value of the new shares is more than double. This makes the possibility of the issuance being successful almost zero.

So with the suspension of this stock issuance plan, where will Hai Phat Invest get the money to pay off maturing debts according to the financial restructuring plan set out at the beginning of the year?

How is Hai Phat Invest doing business?

The suspension of the issuance plan further darkens the already gloomy business picture of Hai Phat Investment.

According to the mid-year consolidated financial statements, Hai Phat Investment recorded revenue of VND655.2 billion, down 27% year-on-year. Of which, gross profit reached VND163.7 billion, down 10% year-on-year. Gross profit margin reached 24.9%.

Notably, financial revenue in the first 6 months of the year increased sharply to 15.3 billion VND. However, financial expenses are still a concern for the company, accounting for 60 billion VND. Most of which is interest from debts, accounting for 58.2 billion VND.

Despite the decline in revenue, Hai Phat's selling expenses in the first half of the year still doubled, accounting for 36.8 billion VND. In return, business management expenses decreased by 20%, down to 25.1 billion VND.

After deducting expenses and taxes, HPX's remaining after-tax profit was 47.2 billion, down 17.4% over the same period last year.

Pressure from trillion-dollar debt, debt repayment "eats up" almost all revenue

Currently, debts with pressure to pay principal and interest are "haunting" Hai Phat Invest, making it impossible for business results to increase.

As of the end of the second quarter of 2024, the company's total liabilities are VND 4,836.9 billion, equivalent to 57% of the company's total capital.

Although the company recorded cash flow of up to 1,101.8 billion VND from home buyers paying in advance in the first 6 months of the year. However, the financial debt is still up to 2,294.8 billion VND. Compared to last year, the amount of debt has decreased but is still a burden for the company.

In fact, it can be seen that in the first 6 months of the year, revenue brought in 655.2 billion VND, but the company recorded principal repayment of up to 350 billion VND and interest payment of 60 billion VND.

Thus, 2/3 of the revenue achieved in the first half of the year had to be used to pay off principal and interest on loans, not to mention other operating costs that the business had to maintain.

Pressure from large bond debts forced HPX to plan to issue 152 million shares to raise money to pay off debts. This plan was stopped because HPX shares continuously lost value, making the company's ability to repay debts even more uncertain than before.

Source: https://www.congluan.vn/dung-phat-hanh-152-trieu-co-phieu-hai-phat-invest-hpx-giai-quyet-sao-voi-khoi-no-nghin-ty-post313693.html