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Funds-starved property firms hit market
Faced with pressure to complete ongoing projects and with lending for the sector restricted, many property developers are turning to the equity market to raise funds.
De Tam Joint Stock Company (Detaco) (HOSE: DTA) is set to issue 5 million shares to mobilize capital for its ongoing Detaco Phu Quoc villa project in Phu Quoc.
Becamex Infrastructure Development Joint Stock Company (Becamex IJC) is offering to sell nearly 220 million shares, which will increase its chartered capital four times, to raise money for its IJC urban area project in Binh Duong Province.
Vietnam Housing Joint Stock Company and Housing and Land Investment and Development Joint Stock Company (Cotec Land) also have plans to his the market.
All of them are already listed.
Many stock brokerages, including Ho Chi Minh City Securities, Viet Dragon Securities, and Sacombank Securities have also announced plans for issuing shares this year.
Other industries with such plans include oil and gas, construction, fisheries, and food processing.
Analysts attribute this suddent rush to the difficulty in obtaining credit and sky-high interest rates, but are unsure of the benefits.
Most of the isues are likely to be at par, or VND10,000 (US$0.5).
“The fact that so many listed companies are all making fresh issues capital is not only a worry for new investors but also jeopardizes the benefits of existing shareholders,” Le Dat Chi, a Securites Analyst, said.
Without many sources of funds and with many stock prices falling below par, investors will consider carefully before subscribing to these issues, he said.
The propects for their projects, the firms’ profitability after the capital increase, and other factors will also determine the success of the issues.
The analysts said the companies should not have opted for fresh issues, causing “difficulties” for shareholders and the market when the government is calling for stability rather than growth.
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