Right from the beginning of 2024, when the annual general meeting of shareholders season began, a series of enterprises planned to issue a large number of shares to pay dividends and increase charter capital with the issuance volume at many enterprises reaching hundreds of millions of shares, charter capital increased by thousands of billions of VND.
Typically, banking, securities, real estate and steel companies are not out of the trend with hundreds of millions of new shares of steel companies flooding the stock market.
Nam Kim Steel Corporation (Code: NKG) has recently planned to offer 131 million shares to existing shareholders at VND12,000/share. With the above issuance quantity and offering price, Nam Kim Steel wants to raise VND1,580 billion. The entire amount is expected to be contributed by the enterprise to Nam Kim Phu My Steel Company Limited to invest in the Nam Kim Phu My steel sheet factory project in Ba Ria - Vung Tau province.
In addition to issuing to existing shareholders, Nam Kim Steel also approved a plan to issue 52.6 million shares to increase capital. The expected implementation time is from the third quarter to the fourth quarter of 2024, after being approved by the State Securities Commission. If both issuances are completed, the total number of new shares issued by the enterprise will be 180 million shares. After the issuance, Nam Kim's charter capital is expected to increase from VND 2,633 billion to nearly VND 4,500 billion.
Previously, Hoa Phat Group (Code: HPG) issued more than 580 million shares to existing shareholders, at a rate of 10% (each shareholder owning 10 HPG shares will receive 1 new share). The issuance source is taken from the surplus of equity capital of more than 3,200 billion VND, undistributed profit after tax of more than 2,600 billion VND.
After the issuance, Hoa Phat's charter capital increased by nearly VND6,000 billion, to nearly VND64,000 billion. Hoa Phat became the enterprise with the second largest number of outstanding shares on the stock market with 6.4 billion shares, only after VPBank with 7.9 billion shares.
Hoa Sen Group Joint Stock Company (Code: HSG) also approved a plan to issue 5 million shares under the employee stock option program (ESOP) at a price of VND10,000/share. All of these shares will be restricted from transfer within 1 year from the end of the issuance.
Enterprises issuing shares to increase charter capital is an annual activity. After each annual General Meeting of Shareholders, the stock market will see a wave of new share issuance when enterprises need to mobilize capital, consolidate and increase financial capacity, etc.
However, many experts believe that when a large number of new shares "flood" into the market, it can also cause pressure on the market. The increased number of shares can increase the dilution of shares and each existing shareholder will be significantly affected in terms of rights.
