HAGL's HGI defends 60,600 VND offer price, targets 1,140B VND raise

Overview

HGI, the agricultural subsidiary of Hoàng Anh Gia Lai (HAGL), plans to issue up to 18.8 million shares at 60,600 VND per share, aiming to raise about 1,140 billion VND. Chairman Đoàn Nguyên Đức defended the offer price at an investor meeting on August 18, citing the company’s profit growth prospects. The company expects to list on UPCoM in Q3 or Q4 2026.

Key Facts

• HGI plans to issue up to 18.8 million shares, equivalent to 11.157% of outstanding shares, at 60,600 VND per share.
• The offering is expected to raise approximately 1,140 billion VND (about USD 45.6 million).
• HGI’s ROE for 2025 is estimated at 44%, with P/E around 6 times and P/B around 2.4-2.5 times, according to OCBS, the advisory unit.
• HGI manages 8,000 hectares of plantations in Laos, with 40% currently under exploitation; the company targets 12,000 hectares by 2028.
• In 2025, HGI reported revenue of 4,885 billion VND and after-tax profit of 1,486 billion VND; 2026 targets are 7,456 billion VND revenue and 1,815 billion VND profit.
• HGI plans to pay a dividend of 5,000 VND per share over the next three years, with a payout ratio below 35% of profit.
• The company expects to register for UPCoM trading in Q3 or Q4 2026.

What Happened

At an investor meeting in Hồ Chí Minh City on August 18, shareholders questioned the 60,600 VND offer price for HGI’s share issuance, calling it high. Chairman Đoàn Nguyên Đức responded that the price was set after working with valuation and advisory firms, and that investors should consider HGI’s profit growth potential in the coming years.

OCBS, the advisory unit for the offering, highlighted HGI’s strong financial metrics: ROE of 44% for 2025, P/E of about 6 times, and P/B of 2.4-2.5 times. OCBS also noted that HGI’s asset turnover is currently 0.5 times, below the industry median of 1.4 times, indicating room for improvement. The company plans to increase its harvested area from 44% in 2026 to over 90% by 2030, with a target of 12,000 hectares under cultivation by 2028.

Market Context

HGI is not yet listed on a major exchange; it is preparing for UPCoM listing, which is part of HAGL’s broader restructuring. The parent company, HAGL, trades on HOSE. The offering comes as HGI expands its agricultural operations, particularly in bananas, durian, and Arabica coffee. The company’s revenue and profit have been growing, with 2025 results showing a net profit margin of about 30%, though this is expected to decline to 24% as coffee contributes from 2027, due to lower-margin internal trading.

Strategic Significance

The capital raise is aimed at funding HGI’s expansion and reducing debt. The company plans to use the proceeds to increase its plantation area and improve efficiency. The offer price, while seemingly high, is justified by the company’s growth trajectory and high ROE. For long-term investors, the key is whether HGI can deliver on its profit targets and successfully list on UPCoM, which would provide liquidity and potentially attract foreign investment. The dividend policy of 5,000 VND per share over three years, with a payout ratio below 35%, indicates a focus on reinvestment.

What to Watch

• HGI’s financial results for Q2 and Q3 2026 to see if revenue and profit meet targets.
• Progress on the Arabica coffee processing plant, expected to be completed in October 2026, and the first commercial harvest from October 2027.
• The actual listing date on UPCoM and the initial trading price.
• Any updates on the offering’s subscription rate and the participation of institutional investors.
• Changes in durian and coffee prices, which could impact HGI’s revenue mix and margins.