From loss to profit: steel maker SMC sees stock rally, avoids delisting risk

Vietnamese steel manufacturer SMC Trading Investment JSC (HoSE: SMC) has seen its stock price soar nearly 60% since early April after the company turned its 2024 loss into profit over bad debt provision reduction.

Swimming upstream

In April, the Vietnamese stock market faced a steep decline triggered by U.S. tariff shocks. The VN-Index, which represents the Ho Chi Minh Stock Exchange (HoSE), plummeted from around 1,330 points to below 1,100.

It later rebounded above 1,200 points following news of a 90-day negotiation window delaying the imposition of new tariffs.

Amid this downturn, many steel stocks such as NKG of Nam Kim Steel, GDA of Ton Dong A, HSG of Hoa Sen Group, and TVN of Vnsteel experienced sharp falls.

However, SMC stood out with a remarkable rally. Since April 9, it surged from around VND5,700 to over VND9,000 ($0.35) per share last Friday, nearly a 60% increase.

The rally followed SMC’s announcement of revised 2024 consolidated and parent company financial statements, which changed from loss to profit.

In the report, short-term bad debt provisions were reduced from VND663 billion to VND328 billion ($12.62 million), resulting in a turnaround from a loss of VND286.7 billion to a profit of VND48.5 billion ($1.87 million).

For the parent company, provisions were cut from VND630 billion to VND295 billion ($11.35 million), transforming a loss of VND224 billion into a profit of VND111 billion.

At the end of 2024, SMC's total assets stood at VND4.85 trillion, with non-performing loans accounting for 26.7% of the total at VND1.29 trillion ($186.6 million), down only VND16 billion from the beginning of the year

The company held VND144 billion ($5.54 million) in cash and equivalents and VND503 billion ($19.35 million) in investments held to maturity (primarily deposits with terms of over 3 months).

Its short-term borrowings and finance leases totaled VND2.17 trillion ($83.5 million), down VND512 billion from the year outset. Long-term borrowings also declined from VND331 billion to VND217 billion ($8.35 million).

Avoiding delisting risk

The conversion from a loss to a profit in 2024 is critical. If SMC had reported a third consecutive year of losses, it would have faced mandatory delisting from the Ho Chi Minh Stock Exchange (HoSE). With this revision, SMC has temporarily avoided delisting although final confirmation awaits the audited financial statements.

Earlier in April, the HoSE issued a formal reminder to SMC for the delayed submission of its 2024 audited financial report. The company cited ongoing corporate restructuring as the reason and committed to submitting the report by the extended deadline of April 29.

Currently, SMC remains under special control due to consecutive losses in 2022 and 2023 and delays in audited disclosures. The firm stated last year it implemented multiple measures such as asset liquidation, investment divestments, and close tracking of macroeconomic and steel industry trends to improve its performance and implement a more adaptable business strategy.

However, both domestic and international steel markets remained under pressure, with falling steel prices and sluggish demand. The domestic real estate sector also continued to struggle, further impacting SMC’s operations.

Looking ahead, the company plans to continue restructuring, focus on improving operations, accelerate debt collection, and work toward removing the stock from control status - all in pursuit of long-term recovery and sustainable profitability.

Closing Tuesday, SMC stood at VND8,580 ($0.33) per share.