Challenges mount for Vietnam’s Century Synthetic Fiber Corporation

Ho Chi Minh City-based Century Synthetic Fiber Corporation is facing a myriad of difficulties as it has failed to raise capital, while hundreds of billions of VND (VND100 billion = $3.82 million) in project-related debt near maturity.

Capital expansion failure

The corporation, listed on the Ho Chi Minh Stock Exchange (HoSE) as STK, has just released the results of its private share offering which are disappointing.

The company planned to issue 13.5 million private placement shares at VND27,500 ($1.05) each to raise VND371 billion ($14.15 million). However, the offering ended with zero investor participation.

This result was unexpected, as four investors — all existing shareholders and company executives — had previously committed to purchasing the shares. They are chairman Dang Trieu Hoa (registering 5.5 million shares), vice chairwoman Dang My Linh (7 million shares), Nguyen Thai Hung (100,000 shares), and Phan Gia Dung (900,000 shares).

Despite these commitments, no shares were ultimately issued, and the company officially ended the offering without raising any new capital.

The plan had originally been approved in 2022, but faced repeated delays due to regulatory and procedural hurdles. At the time of planning, STK shares were trading above VND40,000 ($1.53) apiece.

However, due to market volatility and internal issues, the stock price has since fallen to around VND25,800, below the proposed offering price.

STK planned to raise capital for its Unitex project in the southern province of Tay Ninh, and the failed fundraising now places additional pressure on the firm to service project-related debt.

As of Q2/2025, the company had borrowed over VND1.17 trillion ($44.63 million) to invest in Unitex, including a $38.4 million loan from Taiwan’s CTBC Bank, with principal repayments due between September 30, 2025 and January 17, 2028.

Additionally, there is a VND130 billion ($4.96 million) loan from Orient Commercial Bank (OCB), with repayments scheduled from September 26, 2025 to June 10, 2032. In total, VND361 billion ($13.77 million) in long-term Unitex-related debt is nearing repayment.

Apart from investment loans, the company also has VND642 billion ($24.5 million) in short-term debt for working capital. Yet, its cash reserves dropped sharply to just VND12.4 billion by the end of Q2, down from VND105 billion at the start of the year.

The Unitex project is a major strategic initiative for STK. Phase 1 alone is expected to add 36,000 tons per year of production capacity - a 60% increase, bringing STK’s total capacity to 99,300 tons per year. As of end-June, the firm had invested VND2.18 trillion ($83.17 million) in the Unitex plant, which remains listed under construction-in-progress assets.

At the company’s annual general meeting, chairman Dang Trieu Hoa expressed hope that the project would become operational in the second half of 2025, pending the issuance of operating licenses. This year’s production plan anticipates that 35% of total output will come from Unitex.

Return to losses in Q2

Alongside its failed fundraising, STK reported a post-tax loss of VND6 billion ($228,920) in Q2/2025, marking a return to losses after three profitable quarters.

Revenue for the quarter rose 10% year-on-year to VND333 billion ($12.7 million). Cost of goods sold decreased by 6%, lifting gross profit by 4.2 times to VND62 billion. Financial expenses, while slightly lower than the same period last year, remained high at VND54.6 billion, primarily due to foreign exchange losses and loan interest.

Operating expenses were relatively stable, leading to a pre-tax profit of VND1.7 billion ($64.86 million), a notable improvement from the VND55.3 billion loss in Q2/2024. However, high income tax expenses pushed the bottom line back into the red, resulting in a VND6 billion net loss for the quarter.

For the first half of the year, STK recorded VND710 billion ($27.09 million) in revenue, up 24.7% year-on-year. Its after-tax profit turned around from a VND55 billion loss to a VND29.6 billion ($1.13 million) profit.

For 2025, STK set ambitious targets with revenue of VND3.27 trillion ($124.76 million), 2.7 times that of 2024, and after-tax profit of VND309.8 billion ($11.82 million), 25 times higher.

However, by mid-year, the company had only reached 21% of its revenue goal and 9.5% of its profit target, placing significant pressure on performance in the second half.

Looking back, the company has consistently fallen short of its forecasts over the past three years. In 2024 alone, its revenue reached only 45% of the target and profit just 4.1%.

The shortfall was attributed to weak demand for textiles in key markets such as the U.S., EU, and Japan, along with the financial burden of the Unitex project, including interest costs and foreign exchange losses.

On the stock market, STK closed Monday at VND25,900 ($0.99) per share.