Lost 2.7 billion USD in 3 years

The stock market in the last sessions of the year of the Dragon continued to trade quietly, liquidity dropped to a very low level. In particular, real estate stocks were weak, prices tended to decrease.

NVL shares of No Va Real Estate Investment Group Corporation ( Novaland ), chaired by Mr. Bui Thanh Nhon, decreased for the fourth consecutive session, losing nearly 5.7% and reaching a historic low of around VND8,950/share.

Previously, on January 10, for the first time since its listing at the end of 2016, NVL fell below par value, losing the 10,000 VND/share mark. The very strong support level of 10,000 VND was broken. NVL quickly fell below 9,000 VND/share. Selling pressure increased very strongly, 10-16 million units were transferred per session.

NVL decreased after the Board of Directors adjusted the price and conversion rate for the 300 million USD international bond lot for the 5th time, from 40,000 VND/share to 36,000 VND/share, but still more than 4 times higher than the price on January 14.

Over the past month, NLV has decreased by 12%, and if we count the whole year of 2024, this code has decreased by about 50%. Compared to the level of 92,500 VND/share in mid-2021, this stock has even "evaporated" more than 90%.

The assets of Chairman Bui Thanh Nhon (1958) also plummeted accordingly. In early 2022, according to Forbes, Mr. Nhon had assets of 2.9 billion USD. But by November 2022, Mr. Nhon's assets fell below the threshold of 1 billion USD and was no longer on the list of world USD billionaires.

Based on stock value, Mr. Nhon currently has assets worth more than 5,400 billion VND. His assets have decreased by nearly 2.7 billion USD in the past 3 years.

Mr. Nhon is directly holding more than 96.8 million shares. In addition, he also holds more than 512 million shares through two separate companies, Novagroup and Diamond Properties.

Mr. Nhon's assets have also decreased sharply because the related group of shareholders has continuously reduced their ownership, from about 1.2 billion shares to more than 750 million shares as at present, the holding ratio has dropped to below 39%. Mr. Nhon's group used to hold more than 60% at NVL.

Since the end of 2022, Mr. Nhon's group of shareholders has been continuously liquidated or actively sold shares to settle Novaland's debts.

The decrease in NVL below par value may affect the plan to issue individual shares to professional investors and existing shareholders. In April 2024, the General Meeting of Shareholders approved the plan to issue 200 million individual shares to raise VND2,000 billion and issue 1.17 billion shares at VND10,000/share to existing shareholders at a ratio of 10:6 to collect VND11,700 billion. According to the plan, the proceeds will be invested in subsidiaries, debt restructuring and improving the financial situation.

BuiThanhNhon nguonNVL.gif
Mr. Bui Thanh Nhon. Photo: NVL

Tycoons in trouble, real estate industry icon in decline

Novaland is considered a real estate giant in Vietnam, with famous projects such as Aqua City, Novaworld Phan Thiet, Novaworld Ho Tram, Novahills Mui Ne, LakeView City... However, Mr. Nhon's business is in trouble.

By the end of September 2024, NVL had total liabilities of more than VND 191,000 billion, of which short-term loans were nearly VND 37,700 billion and long-term loans were nearly VND 22,200 billion. Owner's equity was just over VND 40,600 billion. The debt/equity ratio was very large, up to 4.7 times, high risk. Inventory amounted to more than VND 145,000 billion.

The restructuring process of NVL is being accelerated. Recently, the company has had to sell many assets and add more credit, buy back many bonds worth thousands of billions of VND. Some projects have had their legal problems resolved… But in general, the debt burden is still large.

Currently, Mr. Bui Thanh Nhon and related people are at risk of losing control of Novaland when the shares fall below par value. NVL is using a large amount of shares belonging to Mr. Nhon's group as collateral. When the share price drops sharply, it may be sold off. The holding ratio may fall below 36% - the threshold for vetoing important decisions in the company.

Mr. Nhon's group could also lose veto power at Novaland if the $300 million bond batch is converted into shares under the recently approved plan.

Not only Novaland, many real estate companies on the stock market are also facing many difficulties, with their stocks falling sharply. Codes such as Dat Xanh (DXG), Phat Dat (PDR), DIC Corp. (DIG), Ha Do (HDG)… have seen their prices fall sharply. In the session on January 14, the number of real estate codes falling was twice as many as the number of codes rising.

The real estate market has entered a new phase, it is no longer easy to have explosive growth in all segments. It is also not easy for businesses to use financial leverage to break through.

From being one of the most attractive groups on the stock market, real estate stocks have disappointed investors over the past year. The outlook for 2025 is not very positive either. Many real estate businesses have recorded large debts, unpaid bonds due...

Recently, Novaland announced a plan to buy back bonds before maturity with a maximum value calculated at par value of VND 7,000 billion. With great efforts, on December 31, 2024, NVL bought back 5 lots of bonds before maturity with a total value of VND 1,550 billion. This enterprise still has VND 5,450 billion of bonds to buy back.

Apartment prices reach hundreds of millions/m2, real estate giants rush to show off profits . Apartment prices reach hundreds of millions/m2 in the suburbs, auctioned land also skyrockets. Brokerage revenue at some real estate companies has increased sharply. Have real estate transactions really become active again?