TTF: The promise of Mr. Mai Huu Tin and fragility of TTF shares

In recent days, Truong Thanh Wood Technology Group JOINT STOCK COMPANY (code: TTF) is causing a financial uproar by the statements of Chairman Mai Huu Tin at the Annual General Meeting of Shareholders (AGM) in 2021, related to the strategic objectives of the enterprise. Especially the promise of bringing TTF shares back to the par value of VND 10,000 / share in the shortest time.

In fact, TTF shares have recently increased significantly, from more than VND 4,000 / share to the price zone of VND 8,000 / share in a short time thanks to the positive change from business activities, along with ambitious plans from the management … However, many comments that this will only be a “fire in the middle of the winter” of TTF shares because Truong Thanh Wood has too many backlog problems.

“Play a completely different game”

At this year’s General Meeting of Shareholders, the company management board has submitted to shareholders to approve plans to greatly affect the capital situation at the company.

Accordingly, Truong Thanh Wood will stop implementing the private placement plan for debt swap at Dong A Commercial Bank which was approved from the General Meeting of Shareholders in 2020, but has not been approved by the State Bank.

TTF: The promise of Mr. Mai Huu Tin and fragility of TTF shares

Immediately after the commitment of a business leader will often create a bullish wave effect for that stock.

To replace this plan, Truong Thanh Wood plans to issue private shares of 59.4 million shares with par value of 10,000 VND / share, total proceeds from the offering is nearly 595 billion VND. This is a preferred dividend share with the right to convert at a fixed rate of 12% / year.

In addition, also at the General Meeting of Shareholders, the company has submitted to shareholders the plan to offer private shares to swap debts with the number of more than 40.5 million shares, par value 10,000 VND / share, equivalent to more than 405 billion VND. All issued shares will be swapped for a creditor, Mr. Bui Hong Minh with a fixed dividend of 6.5% / year.

The private issued shares are expected to be issued by Truong Thanh Wood to the public, professional securities investors. The entire proceeds from the issuance will be used to restructure loans, supplement working capital for production and business activities of the company.

In addition to submitting issuance plans, Mr. Mai Huu Tin said that he himself will “pour” 100 billion VND into the first issuance and set a target of 1 billion USD will be the lowest number that this businessman will spend on this “game”. At the same time, it is confirmed that TTF shares will return to par value at the end of this year or early next year.

“I am also the biggest shareholder and if I cannot create value for me, I cannot do anything for other shareholders. I spend time and effort for Truong Thanh Wood not to bear the low stock price as The current. Once out of bad debt, the company will play a completely different game because it has the right to borrow cash and foreign currency with low interest rates, ”Mr. Tin affirmed.

Fragile facility

In 2021, Truong Thanh Wood sets a plan to increase revenue by 67% to 2,025 billion dong, pre-tax profit to 59 billion dong, 2.3 times higher than that of the previous year. However, analysts said that this ambition is not easily achieved when by the end of 2020, the enterprise is still having accumulated losses of 3,044 billion VND.

In this context, PVS intends to focus on maximal resources to promote and develop production and business activities, ensuring the provision of quality specialized petroleum technical services, actively promoting marketing to expand foreign markets.

In which, short-term liabilities exceeded short-term assets 1,268 billion. The company also has overdue loans to banks and third parties worth VND124 billion (Dong A Bank).

In addition to this overdue debt, in the past 2 months, Truong Thanh Wood also had a bank debt that needs to be paid of VND20 billion for Agribank and a mortgage of nearly VND 363 billion for Mr. Bui Hong Minh.

With these debts, the company has repayment plans as mentioned above, but whether it succeeds or not is the story of the latter.

Returning to the story of the price of shares, it must also be repeated, Mr. Mai Huu Tin was not the first businessman who made a promise of face value for his “child”. Previously, in order to reassure shareholders against the sharp decline in stock prices, many business leaders such as Mr. Le Phuoc Vu – Chairman of the Board of Directors of Hoa Sen Group, Mr. Trinh Van Quyet – Chairman of the Board of Directors of FLC Group Mr. Dang Thanh Tam – Chairman of the Board of Directors of Kinh Bac have all made promises to bring stocks back to the correct value, exceeding par value.

Currently, FLC and HSG have both surpassed their par value, even rose to the same 3x price as HSG, but to achieve this achievement these “giants” have repeatedly had to break their promises to shareholders. As for ITA, the commitment “only up and shares will return to par value” has passed over a period of 4 years but this stock is still around the price range of 7,000 VND / share.

In fact, immediately after the leaders’ price commitments, it will often create a bullish wave effect for that stock (TTF shares immediately hit the ceiling price in the session on April 27th General Meeting of Shareholders). However, in the long term, if the promise of par value goes on, investors will lose confidence in the business, as well as the management. The story of Mr. Trinh Van Quyet in the period of 2019-2020 is a good lesson for this concern.

Even a longtime investor in the stock market once said: “The promise of stock prices of business leaders is like going into a barber shop and asking if it is necessary to cut it. Most importantly, what will they do? “.

Source: – Translated by

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