Vinatex’s Board of Directors recently approved a resolution to divest its entire stake in its associate company, Donagamex, a leading garment manufacturer in Dong Nai Province.
As of the second quarter of 2024, Vinatex held 2.8 million shares in May Dong Nai, representing 27.5% of its charter capital, valued at over VND 28 billion at par value. Vinatex plans to conduct a private placement for less than 100 investors, offering a starting price of VND 35,000 per share, which is 3.5 times the par value. The transaction is expected to take place in the third quarter of 2024.
Vinatex will need strong financial results to justify the high asking price for its shares in May Dong Nai (Photo: May Dong Nai)
If the deal is successful, Vinatex stands to gain a minimum of VND 98 billion.
May Dong Nai, formerly known as International Garment Manufacture, was established in 1974 by 14 shareholders from Taiwan. After the liberation of the South, the company was nationalized, renamed, and became a member of Vinatex between 1991 and 1995.
Currently, May Dong Nai has three subsidiaries: May Dinh Quan Joint Stock Company (holding 53.33% of shares), Dong Binh Joint Stock Company (59.17%), and Dong Xuan Loc Joint Stock Company (57.62%). They also have a 30% stake in associate company Dong Minh Phu Joint Stock Company.
For Vinatex to achieve a high selling price for its shares in May Dong Nai, strong financial results are essential. However, May Dong Nai’s performance leading up to Vinatex’s decision to divest has been less than impressive.
In 2023, May Dong Nai reported a 49% year-on-year decrease in revenue, amounting to VND 485.2 billion, and a post-tax loss of VND 30.9 billion, compared to a profit of VND 12.2 billion in 2022. As of December 31, 2023, the company’s assets totaled VND 332.9 billion, including VND 70.3 billion in cash and bank deposits, VND 54.2 billion in inventory, and VND 76.4 billion in long-term work in progress, mainly invested in Hung Loc Industrial Cluster…
Notably, the company’s fixed assets have been depreciated by 85%, leaving only VND 55.3 billion.
These assets are financed by VND 170 billion in equity and VND 162.9 billion in liabilities, with debt accounting for approximately 50%.
Prior to this decision, on July 16, Vinatex also announced its plan to sell its entire 25% stake in May Binh Minh Joint Stock Company (UPCoM: BMG). The selling price is set at VND 43,700 per share, which is expected to bring in a minimum of VND 57.8 billion. However, investors consider this price to be far from realistic, as the market values BMG shares at only VND 18,500, 57% lower than Vinatex’s asking price.
May Binh Minh’s financial performance has also been lackluster, failing to impress when compared to other companies in the garment industry.
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