Serial Achieva’s Strategic Vietnam Joint Venture: Expansion, Profit-Sharing, and Potential Share Awards Signal Growth Opportunities

Key Points from the Announcement

• Serial Achieva Limited (SAL) enters Joint Venture Agreement (JVA) with Viet Son Informatic Joint Stock Company (Vietson) for IT distribution in Vietnam.
• New joint venture company: Achieva Vietson Co., Ltd, to distribute IT products, components, and peripherals in Vietnam.
• Ownership split: Vietson holds 51%, SAL holds 49% of the JV company’s US\$100,000 paid-up capital.
• Vietson is an established Vietnamese IT distributor, authorized partner of Intel, Asus, Kingston, with strong import-export capabilities.
• Board composition: Includes both SAL and Vietson senior management; SAL’s CEO Kenny Sim will chair the board.
• Profit-sharing mechanism: Vietson entitled to 49% of JV’s net profit after tax (NPAT) for 5 years, convertible into bonus shares issued by SAL.
• Bonus shares conversion subject to market price and exchange rate, with an additional 10% bonus upon conversion and a 1.5-year moratorium.
• First-year profit entitlement capped at US\$1,000,000; future caps by mutual agreement.
• Unconverted profit entitlement lapses after 5 years.
• SAL’s US\$49,000 investment funded internally; JV not expected to materially impact earnings or net assets for FY2025.

What Shareholders Need to Know

• Potential Dilution Risk: If Vietson converts profit entitlements into SAL bonus shares, SAL’s existing shareholders may face dilution. The conversion rate is determined by the 30-day average trading price and FX rate, plus a 10% bonus incentive for Vietson, raising possibility of new shares being issued to Vietson.
• Growth in Vietnam: This marks SAL’s entry into the fast-growing Vietnamese tech market, diversifying revenue sources and reducing reliance on Malaysia and Thailand. The JV aligns with SAL’s Southeast Asia expansion strategy.
• Profit-Linked Share Awards: Share awards are tied to performance, incentivizing Vietson to drive JV profitability. Shareholders should monitor JV performance, as high NPAT could lead to significant bonus share issuance.
• Cap on First Year Profits: Vietson’s entitlement for the first year is capped at US\$1 million in NPAT, potentially containing dilution in the initial phase.
• Regulatory Approval: Bonus share issuance will depend on prevailing rules, including Catalist Rules.
• Board Oversight: With Kenny Sim chairing the JV board, SAL retains direct oversight and strategic influence over the JV’s operations.

Why This News Could Move the Share Price

• Entry into Vietnam’s Rapidly Growing IT Market: Retail investors may view this as a strategic move to tap into one of Southeast Asia’s most dynamic technology sectors, potentially driving future growth.
• Profit-Driven Incentives: The innovative profit-sharing and bonus share mechanism could align interests, possibly resulting in improved performance and revenue growth for SAL at group level.
• Share Dilution Risk and Upside: If the JV is highly profitable, Vietson’s conversion of profit entitlements into SAL shares could increase the total share count, impacting share price. Conversely, strong JV performance may be seen positively by the market, supporting share price.
• Strategic Diversification: Investors could respond favorably to SAL’s regional diversification and reduced single-market exposure, improving risk profile and long-term sustainability.

Full Details for Retail Investors

Serial Achieva Limited has announced a joint venture with Viet Son Informatic Joint Stock Company to establish Achieva Vietson Co., Ltd in Vietnam, focusing on distribution of IT products. The JV will have a paid-up capital of US\$100,000, split 51% Vietson / 49% SAL. Vietson, a reputable IT distributor and authorized partner of global brands, will contribute US\$51,000, while SAL will invest US\$49,000 using internal funds.

The JV’s board will include key executives from both companies, with SAL’s CEO Kenny Sim acting as chairman, ensuring SAL’s strategic involvement. Vietson is entitled to 49% of Achieva Vietson’s net profit after tax for five years, convertible into SAL bonus shares at market rates. Upon each conversion, Vietson receives an extra 10% in bonus shares, and there’s a 1.5-year moratorium on these shares. The first-year profit entitlement is capped at US\$1 million; future caps are subject to agreement. Any unconverted entitlement after five years lapses.

Although the JV is not expected to materially impact SAL’s FY2025 earnings or net assets, its potential for future profit and bonus share issuance could affect shareholder value. The move represents a strategic expansion into Vietnam, broadening SAL’s market reach and revenue base. Shareholders should monitor JV results, bonus share conversions, and any regulatory developments.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult their financial advisors before making any investment decisions. The information herein is based on public disclosures by Serial Achieva Limited as of the date noted and may be subject to change.

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