Once upon a time… nostalgia of first stocks

GTT - Victim of unrealistic ambitions

In its quest to become a large conglomerate, Thuan Thao Corporation (GTT) participated on HOSE trading floor with high hopes of raising vast amounts of capital, but contrary to its aspirations, GTT failed in its efforts due to its loss making projects which also led to GTT share value to fall to lowest level in the stock market.

The CenDeluex 5-star hotel project was expected to bring GTT up, but caused GTT to go down instead.
The CenDeluex 5-star hotel project was expected to bring GTT up, but caused GTT to go down instead.

Forerunner in Phu Yen Province

GTT was a forerunner in distribution of goods to domestic companies and joint venture companies in Phu Yen Province. In 2009, GTT became a Joint Stock Company with a charter capital of VND 290 bn and also expanded into new fields of businesses, such as high-end passenger transport services and taxi services; entertainment, restaurants and event management services; real estate consultancy and brokerage services; and bottling of drinking water.

Ms. Vo Thi Thanh is the founder and General Director of GTT as well as Chairwoman of Board of Directors. Soon after GTT was established the company grew rapidly, becoming a perfect symbol of pioneering work in localities in Phu Yen Province. The company was the first in bringing the first private supermarket to Phu Yen Province, and the first private coach service connecting across the country.

Ms. Thanh was honored as the "Golden Rose" for her remarkable efforts in helping overcome poverty in regions and simultaneously turning GTT into a large enterprise worth trillions of dongs.

On 30 June 2010, GTT decided to list 29 million shares on HOSE with a reference price of VND 20,000 per share, within just one year after changing its business model. At that time, GTT advertised heavily about its land fund of 337,000 sq.m located in Tuy Hoa City to enhance its status. To realize its potential further, GTT invested in a series of projects, including resorts, 5-star hotels, theaters and amusement parks. In addition to local projects, GTT also encroached on Ho Chi Minh City by establishing the Thuan Thao Nam Saigon Joint Stock Company with the Tay Saigon Social House Project.

Compiling of massive debts

GTT ambitions to become a powerful corporation quickly failed because the Phu Yen Tourism Industry didn’t get any breakthrough at all, instead the real estate market entered a serious crisis phase. In 2018, Vietnam Asset Management Company (VAMC) announced a property auction of Thuan Thao Nam Saigon Joint Stock Company (a subsidiary of GTT) with participation of 95 individual customers of Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) at its Phu Tai branch in Phu Yen Province.

According to VAMC, the value of the original debt was around VND 1,208 bn and interest due was more than VND 1,070 bn. These auctioned properties also included a land area of 275 sq. m. located on Bui Thi Xuan Street in District 1 in Ho Chi Minh City, which was also the headquarters of the Thuan Thao Nam Saigon Company. Besides, two land plots in Binh Chanh District in Ho Chi Minh City with a total area of 22 hectares were also on auction. Through this auction about 5.2 million GTT shares owned by Ms. Thanh were also sold.

Investment projects in Phu Yen Provence were in a bad situation as well. GTT had high expectations from the construction of the 218 room luxury 5-star CenDeluxe Hotel with all modern facilities such as a state-of-the-art conference room. However, CenDeluxe Hotel is now being considered the main cause of the company’s downfall due to huge debts incurred leading consequently to GTT profit margin falling extremely low.

Next cause was attributed to the high-end Beach Resort & Spa in Tuy Hoa City, built at a total investment capital of about VND 350 bn. The project covers an area of 80,000 sq.m. and includes 91 luxury villas and other luxury facilities such as welcome houses, restaurants, tennis courts, tree parks, and swimming pools. Since the first phase of the project was completed in 2008 and its second phase started in August 2010, this project is still nowhere near completion.

In addition, GTT suffered huge losses in the Thuan Thao Eco-tourism project as well. The project was built in 2010 over an area of seven hectares as the largest amusement park in Phu Yen Province. Although such parks are being built across the country, the number of visitors coming in are important for operations, and in the case of the Thuan Thao Eco-tourism park the turnover was quite modest for all the years.

GTT shares at all-time low

Due to prolonged losses, GTT 43.5 million shares have been delisted compulsorily on HOSE since 30 May 2016. The reason is that the accumulated losses exceeded the actual contributed charter capital in the latest audited financial statement before time of consideration. Specifically, undistributed after-tax profits or accumulated deficit on 31 December 2015 was at a negative of VND 621.52 bn, exceeding the actual contributed charter capital of VND 435.03 bn.

GTT transactions were temporarily suspended since 17 March 2016 as the after-tax profits for two consecutive years of 2014 and 2015 showed negative. GTT asked an audit department to review and re-issue an independent financial statement to replace all audited financial statements with a certain exception shortly thereafter. Instead of the initial loss of VND 121.3 bn, GTT announced an official loss of upto VND 438.8 bn in the new financial statement, raising the accumulated loss to VND 621.5 bn and further exceeding its actual contributed charter capital. This is also the reason why GTT is subject to compulsory delisting.

On 7 June 2016, GTT was listed back on UPCoM with a closing price of VND 800 per share. However, this return didn’t prove advantageous for GTT, and even its shares were restricted in the trading session, only trading on Fridays every week. GTT share price continuously kept falling to lowest level of VND 200 per share in the stock market. Although the share price in trading session was extremely low, GTT has no liquidity at all, because no investor dares to pour money into such an enterprise that is waiting to go into bankruptcy. GTT asked for permission from the Phu Yen Tax Department to issue invoices for individual customers. Currently, GTT is offering a Phu Yen tour to tourists for several hundred thousand dongs per pax.

Translated by Minh Châu

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