The last securities trading sessions of the Year of a Dragon have been quiet with very week liquidity. Real estate shares have turned pale, with prices on the decrease.

NLV shares of Novaland Group owned by Bui Thanh Nhon on January 15 witnessed a price decrease for the fourth consecutive day, losing 5.7 percent in value and plummeting to a historical low of VND8,950 per share.

Prior to that, on January 10, NVL, for the first time since the day it entered the bourse in 2016, saw the price fall to below nominal value. NVL swiftly dropped below VND9,000 per share, with strong selling pressure resulting in 10-16 million units traded per session.

NVL prices fell after the company’s board of directors for the fifth time adjusted the prices and the conversion ratio for the $300 million worth of international bonds, cutting from VND40,000 per share to VND36,000 per share. However, the price was still four times higher than the price on January 14.

Just within the last month, NVL decreased by 12 percent, and has dropped by 50 percent in 2024. The new price represented a loss of 90 percent of value compared with the VND92,500 per share in mid-2021.

As the stock prices are on the decrease, the total assets of president Bui Thanh Nhon, born 1958, have also decreased. Nhon had $2.9 billion in early 2022 as reported by Forbes, but the figure dropped to below $1 billion in November 2022, which weeded Nhon out of the list of the world’s dollar billionaires.

It is estimated that Nhon now has VND5.4 trillion with current NVL price. As such, his assets have dropped by $2.7 billion just in the last three years.

Nhon holds 96.8 million shares. In addition, he has 512 million shares through his two private companies – Novagroup and Diamond Properties.

Nhon’s stock asset decrease is also attributed to the reduction in ownership by related shareholders, from nearly 1.2 billion to just over 750 million shares, bringing the ownership rate down to below 39 percent. Nhon’s group once held over 60 percent of NVL.

The drop of NVL shares to below face value may impact the plan to issue private shares to professional investors and existing shareholders. 

In April 2024, the General Meeting of Shareholders approved a plan to issue 200 million private shares to raise VND2,000 billion, and issue 1.17 billion shares at VND10,000 per share to existing shareholders at a ratio of 10:6 to collect VND11,700 billion. The proceeds are intended to invest in subsidiaries, restructure debt, and improve the financial situation.

Difficulties

As of the end of September 2024, NVL had total liabilities of over VND191,000 billion, with nearly VND37,700 billion in short-term debt and almost VND22,200 billion in long-term debt. Its equity capital was just over VND40,600 billion. The debt-to-equity ratio was very high, at 4.7x, while the inventory had reached VND145,000 billion.

The restructuring process at NVL is being accelerated. Recently, the company sold many assets and sought additional credit, and purchased back a high number of bonds worth trillions of VND. Some projects have seen legal hurdles cleared. Yet, overall, the debt burden remains significant.

Currently, Nhon and related individuals are facing the risk of losing control over Novaland as shares has fallen below par value. NVL is using a large number of shares from Nhon’s group as collateral. Their holding share ratio may drop to below 36 percent, the threshold which maintains the veto right.

Nhon's group could also lose veto power at Novaland if the $300 million worth of bonds is converted to shares following the recently approved plan.

Not only Novaland, but many real estate firms on the stock exchange are also facing difficulties, with stock prices dropping significantly. 

DatXanh (DXG), PhatDat (PDR), DIC Corp. (DIG), HaDo (HDG), for example, have also seen significant declines. On January 14, the number of declining real estate stocks doubled those that were increasing.

Manh Ha