Duc Long Gia Lai Group JSC (DLG), a well-known company in Gia Lai province, originally specialized in processing domestic and export wood products. Under the leadership of Chairman Bui Phap, the company expanded into various sectors and shocked the stock market by acquiring the American component company Mass Noble in 2015, which operates a factory in China.

Following this acquisition, Duc Long Gia Lai's revenue was significantly bolstered by its electronics component business, which was considered a strategic sector alongside wood products, real estate, hydropower, and hospitality.

However, after 20 years of operation, Duc Long Gia Lai has failed to achieve the expected breakthroughs. Its strategy of diversification into agriculture, energy, infrastructure, and electronics manufacturing led the company to spread itself too thin, resulting in inefficient operations.

The company has suffered continuous losses for the past two years. As of the end of the first quarter of 2024, it had accumulated losses of 2,637 billion VND (over $103 million), compared to its charter capital of 2,993 billion VND. Its shares have plummeted to 1,960 VND, less than the price of a cup of tea. The company's market capitalization currently stands at over 595 billion VND.

DLG has significant debt, amounting to over 2,722 billion VND ($107 million) as of the end of March, including nearly 1,073 billion VND in short-term loans and financial leases.

The company has borrowed several trillion VND from banks such as BIDV, VietinBank, and Sacombank. As of the end of March 2024, DLG owed BIDV approximately 1,700 billion VND, including nearly 1,329 billion VND in long-term loans.

The collateral for DLG's loans from BIDV mainly consists of fixed assets and BOT projects. DLG also owes about 410 billion VND to VietinBank, secured by the right to operate and collect tolls from BOT stations on National Highway 14 in Dak Nong province.

DLG shares have been under warning since April 2023 due to audit opinions on its 2022 financial statements. On April 11, 2024, the shares were moved from warning to control status due to negative net profit in the audited financial statements for the past two years.

Regarding bonds, at the end of 2023, DLG only managed to partially repay a 200 billion VND bond. The company cited production difficulties due to natural disasters and pandemics as reasons for its financial troubles. In 2022, DLG also delayed bond repayments.

In the latter half of 2023, DLG faced a bankruptcy petition from Lilama 45.3, which demanded repayment of a 20 billion VND debt.

On July 15, Duc Long Gia Lai announced plans to restructure its investment in Mass Noble Investments Limited (Mass Noble) and to divest its entire stake in the subsidiary.

Previously, DLG had invested over 249 billion VND, equivalent to a 97.73% stake in Mass Noble. This acquisition drew significant attention nine years ago. In May 2015, DLG announced it had acquired Mass Noble by issuing shares to its shareholders at an exchange rate of 12,500 VND per share, totaling 249 billion VND. The swap ratio was 1:1.4 (1 DLG share for 1.4 Mass Noble shares).

In mid-2016, DLG entered the high-tech sector by acquiring a foreign company, investing in Hanbit (Korea) with an initial investment of 10 million USD. This move officially marked DLG's entry into the electronic components manufacturing sector in Korea.

Currently, the electronic components sector is a significant revenue driver for DLG, with three manufacturing plants in Vietnam, Korea, and China.

Notably, the ANSEN electronic component factory in Dongguan, Guangdong province, China, spans 40,000 square meters and specializes in high-tech telecommunication products such as LED lights, car lights, and LCD screens.

In its financial report, DLG mentioned a 30 billion VND land lease payment to China for the factory over 50 years.

Although the electronics component sector generates substantial revenue for DLG, it is declining. Revenue from this sector in 2023 was 573 billion VND, lower than in 2022 due to supply chain disruptions.

DLG plans to hire a valuation company to reassess Mass Noble's value and transfer it at a price not lower than its par value and DLG's ownership value in Mass Noble.

Besides electronics, DLG has also invested heavily in wind, solar, and hydropower projects in Gia Lai, with a total capacity of nearly 4,000 MW, mostly awaiting inclusion in the planning.

In 2024, DLG aims to increase net revenue by 25% to 1,400 billion VND and achieve a post-tax profit of 120 billion VND.

Manh Ha