Mai Linh merges subsidiaries to compete with Grab

The merger will streamline Mai Linh's operations

The Hanoi Stock Exchange (HNX) has just announced approving delisting the stock of Mai Linh Central JSC since June 29 so that it can merge with Mai Linh Group, while Mai Linh Northern JSC has just been approved to delist its stock from UPCoM.

The new company will issue stocks to swap all shares of the merged companies. One share of Mai Linh Northern (code: MLN) will be swapped for 1.2240 shares of the new company, and one share of Mai Linh Central (code: MNC) will fetch 2.5444 shares. Investors holding shares of Mai Linh Group will receive 1.2819 shares after each share they own.

Before the merger, Mai Linh Group had a charter capital of over VND1 trillion ($44 million) and holds a 47.79 per cent stake in Mai Linh Central and a 47.86 per cent stake in Mai Linh Northern. The group also contributes capital to 13 other enterprises mainly operating in taxi and transportation services.

Meanwhile, Mai Linh Northern has a charter capital of VND486 billion ($21.4 million) and has 17 subsidiaries with the total assets of over VND2.05 trillion ($90.3 million). Mai Linh Central has a charter capital of VND92.8 billion ($4.1 million) and has 10 subsidiaries and total assets of nearly VND880 billion ($38.8 million).

The new company, with the projected charter capital of VND1.73 trillion ($76.2 million), will inherit the customer base and technology of the merged companies. Ho Huy, chairman and CEO of the three companies, will likely retain his current position and be the legal representative of the company after the consolidation.

Since the beginning of the year, the price of MNC’s stock has been decreasing from VND5,500 to VND3,900 apiece (on June 28), equivalent to a decrease of 29 per cent. In the end of the first quarter, Mai Linh Central gained VND126 billion ($5.55 million) in revenue, but negative VND318 million ($14,000) in profit, respective decreases of 32 and 89 per cent on-year. Meanwhile, the price of MLN’s stock has been reducing continuously to VND2,300 apiece (on June 28).

Despite the sluggish performance under the severe competition from Grab, Mai Linh Group set the ambitious business targets of VND6.16 trillion ($271.4 million) in total revenue and net profit of VND239.2 billion ($10.54 million) this year. The figures will rise to VND7.46 trillion ($328.64 million) in revenue and VND793.6 billion ($35 million) in net profit in 2020.

The group will retain the Mai Linh Group name and brand after the merger. Mai Linh Northern and Mai Linh Central will transfer all of their assets, ownership rights, and legal obligations to the incorporated company and terminate their existing operations.

However, it has yet to be seen whether the combined entity will be able to take up the gauntlet thrown by ride-hailing firms like Grab and newcomers like Go-Jek.