Companies Spend the Raised Capital on Expanding Their OperationsEconomy
Ulaanbaatar, March 30, 2023 /MONTSAME/. Companies that have issued shares and bonds must report to the Mongolian Stock Exchange (MSE) the spending of their capital, raised through selling their shares, on an annual and semi-annual basis. In the event that the spending is not on the intended or planned purpose, they are held accountable in accordance with relevant regulations.
D. Nyamdorj, a Capital Market Analyst, presented how the companies, that participate in the capital market and have issued their shares and bonds, are spending their raised capital. According to him, the spending can vary, depending on the nature of their products, services, and operations.
For instance, the MSE is spending MNT 11.9 billion, which was raised during its IPO in January 2023, mainly on its technological improvements, digitalization of the operations, and training and service center updates.
“Invescore” Non-Banking Financial Institution (NBFI) is planning to spend the capital of MNT 50 billion, which will be raised through the issuance of its bond, on financing its loan portfolio.
While “Sendly NBFI” JSC has issued 85,000 units of debt instruments worth MNT 8.5 billion, each with a par value of 100,000 and an annual coupon rate of 19.2%. According to their bond prospectus, they are planning to spend the capital as a financial resource for their main business activity.
The net profits of the banks listed in the MSE have increased by 87-355 percent.
The State bank issued an IPO in Q4 2022 and became the first systematically influential bank that went public. According to “Mandal Asset Management,” their net profit has reached MNT 96 billion, up 87% over the previous year, which shows a record-high rate in recent years’ performance of this bank. Their ROI (return on investment) is 22%.
The “Golomt Capital” informed that the net profit of the Golomt bank had reached MNT 100 billion as of the end of Q4 2022, an increase of 355% compared to the same period last year, which was the record high growth for this bank as well. While their equity has reached MNT 844 billion, a growth of 42%. Their ROI is 14%.
As stated in the report by ‘BDSec’ JSC, Bogd Bank’s equity and the number of loans issued by the bank have reached MNT 116.7 billion and MNT 208.1 billion, up 15% and 42 % over last year, respectively. In 2022, the abovementioned three banks were listed in the MSE Top 20 Index by their number of securities traded. Since the IPOs, their per-share prices have slightly decreased.
“Increase in net profits allow businesses to disburse dividends for their shareholders. On the other hand, the dividend disbursement is, indeed, a kind of capital spending.” B. Ulziibayar, Chair of the Board of Directors, Mongolian Association of Securities Dealers said.
In recent years, share prices of enterprises of the food sector have been increasing. For example, share prices of “Talkh Chikher” JSC, “Monos” JSC, “Tumen Shuvuut” JSC, “APU” JSC, and “SUU” JSC have shown average annual increases of 30 percent.
Also, the sales and net profit of the "Gazar Shim" LLC, which issued an IPO, have shown relatively high growth in the last 5 years. “Gazar Shim" LLC has publicly offered 16.54 percent of its total shares, or 198 million shares valued at MNT 53 each. They intend to raise a total of MNT 10.5 billion from the market with the purpose of increasing their market share, entering a new market, and increasing the volume of their exports.