Auto distributor calls off share issue plan
Auto distributor calls off share issue plan
Truck distributor Hoang Huy Investment Services Co (HHS) won't be issuing 30 million to 60 million shares to dealers, as it has arranged capital for developing car service centre systems.
"Positive business growth of the company in 2015 has helped ensure funds to develop the service systems without the need of seeking new capital," the company said in a statement on its website.
The company hoped its dealers would save these investments to develop the business and boost sales, it said.
According to the plan approved on June 25 this year, the company would issue additional shares of between 30 million and 60 million shares to its sole agencies to raise investment capital to expand the car service centre systems nationwide.
However, the auto distributor decided to put off the plan after it arranged sufficient capital and brought several service centres into operation.
Hoang Huy Investment Services Co is the biggest listed auto company with market capitalisation of almost VND3.64 trillion (US$162.5 million).
It posted encouraging business results in the nine months of this year, following which its total sales reached nearly VND2.8 trillion ($125 million), while net profit touched almost VND417 billion ($18.6 million), a rise of 228 per cent and 521 per cent, respectively, over the same period of last year.
It was no surprise that the share price followed suit, having climbed 34.5 per cent from VND11,600 a share on January 5 to VND15,600 on December 1.
The company's shares have been declining for four of the last six sessions while closing unchanged in the other two days, driven by concerns that new import duty levied on trucks by the Ministry of Finance would negatively affect its future earnings.
According to Circular No 163/2015/TT-BTC dated November 5, 2015, amending preferential import tariffs on automobiles and components, duty on imported trucks will increase from December 20 this year.
Import duty imposed on trucks with loading capacity more than 10 tonnes, but not exceeding 20 tonnes, will increase from 30 per cent to 50 per cent, the models with the maximum load of over 20 tonnes, but not exceeding 24 tonnes, up from 20 per cent to 50 per cent.
Taxes for dedicated trucks including waste collection vehicles, cement tank trucks or mud trucks, will see a smaller increase from 15 per cent to 20 per cent.
According to research study conducted by Saigon Securities Inc, this new import duty scheme would have an adverse impact on the Hoang Huy's business, which specialises on medium and heavy imported trucks, as well as the company's share prices.
