Headwinds for DIG

Nam Vinh Yen urban area project

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Big net loss

In 1Q24, DIG's revenues were VND 186.4 billion, a 5.7% decrease from the same period last year. Real estate business income was VND 111.8 billion (60 percent of overall revenue), service revenue was VND 37 billion (19.8%), and semi-finished revenue was VND 20.2 billion (10.8%). Notably, in this quarter, DIG's sales rebounded to around VND 185.7 billion. Thus, this enterprise's net sales totaled just 489 million VND, a 99.8% decrease from the same time in 2023. This causes DIG to incur a gross loss of VND 50.8 billion.

During the period, DIG's financial revenue plummeted by 92.9% to VND 12 billion, while sales and business management expenses climbed more than in the same month previous year...

As a result, DIG recorded a net loss of more than VND 121.2 billion, the largest quarterly loss since its listing.

DIG's total assets rose by 5.6% from the start of the year to March 31, 2024. Of which, inventory accounted for 38.2 percent. Meanwhile, DIG's overall debt has climbed by 36.2% since the beginning of the year, reaching VND 4,238.7 billion. DIG's outstanding bond estimate is VND 2,444 billion by the end of March 2024.

Challenges for fundraising

On May 10, 2024, DIG approved a 200 million-share offer to current shareholders. Therefore, these shares will be offered for VND 15,000 per share. The DIG price for the morning of May 14, 2024 is VND 28,550 per share. The asking price is about half the market price.

DIG aimed to raise VND 3 trillion if all 200 million shares were sold. DIG will invest VND 1,135 billion in the Cap Saint Jacques project's Phases 2 and 3, with Phase 2 projected to cost VND 535 billion and Phase 3 costing VND 600 billion. This company's next goal is to fund the Vi Thanh housing project with VND 965 billion, of which VND 695 billion will be utilized for infrastructure development and other operations, and VND 270 billion for the use of land.

Many analysts said the issuing of 200 million shares to existing shareholders as part of the 410-million-share-issue plan to increase DIG's share capital to more than VND 10.2 trillion may meet challenges due to the company's significant debt and losses.

DIG's revenue and profit over years 

Business plans are hard to complete

In terms of DIG's business strategy since the COVID-19 epidemic, the company has set ambitious targets but delivered disappointing outcomes. In 2024, DIG aims to achieve combined revenue of VND 2,300 billion, a 72% increase over the previous year, and a combined profit before tax of VND 1,010 billion, six times more than in 2023.

At DIG's 2024 General Meeting, CEO Nguyen Quang Tin stated that the Dai Phuoc Ecotourism Urban Area project will contribute VND 881 billion, Lam Ha Center Point project will contribute VND 129 billion, Nam Vinh Yen urban area project will contribute VND 87 billion, Vi Thanh project will contribute VND 46 billion, and Hiep Phuoc and Vung Tau Gateway projects will contribute approximately VND 20 billion to the company's profit plan of VND 1,000 billion.

DIG cleared legal impediments for these projects in 1Q24, and planned to complete these projects in 1H24, allowing the company to meet its profit targets for the year.

Despite approving an ambitious profit objective and asserting reasons for attaining it, DIG was instantly "cold-watered" in 1Q24, when it posted a net loss owing to sales value returned of about VND 186 billion.

As previously discussed, with several obstacles to fundraising, DIG is expected to confront numerous challenges in executing its ambitious 2024 business strategy.