Four partners have shown an interest in a share issuance of leading Vietnamese construction contractor Hoa Binh (HBC) and one of them, from Australia, said it is willing to spend $60-100 million, revealed CEO Le Van Nam on Tuesday.
At the company’s annual general meeting in Ho Chi Minh City the same day, HBC shareholders approved a plan for a private placement of 274 million shares with a minimum price of VND12,000 ($0.51) per share in 2023. If successful, the minimum proceeds have been estimated at VND3.29 trillion ($139.77 million), Nam said.
The proceeds will be used to supplement business capital, swap debt with partners (subcontractors, suppliers, manufacturers), service loans, and invest in project development, he said, adding that as of June 23, 89 suppliers and subcontractors had agreed to swap debts for shares with a total value of VND650 billion ($27.6 million).
According to vice chairman and deputy CEO Le Viet Hieu, the corporation is targeting VND12.5 trillion ($531.2 million) in consolidated revenue and VND125 billion ($5.3 million) in consolidated profit in 2023.
"In its business strategy for 2024-2026, HBC aims to reduce the debt-to-equity ratio to 1, and start to make a profit from 2024, which will reach VND600 billion ($25.5 million) by 2026. Its gross and net profits are expected to increase by 6% and 2% in 2024, and 9% and 4% in 2026, respectively," he said.
In a letter to shareholders ahead of the meeting, HBC chairman Le Viet Hai affirmed that the current difficulties are just temporary and when the “storms” disperse, the company will continue to develop, restore its position, and come back strongly.
He stated that 2022 and 2023 had been the most difficult periods for Hoa Binh during its over-35-year journey. Over the past five years, the construction industry has suffered, particularly in the urban housing and resort sectors - the company's two main construction fields.
Since 2017, very few urban housing projects have been granted construction permits, resulting in a shortage of jobs, he said, noting that a supply and demand imbalance had caused negative impacts on contractors and the competition has become fiercer than ever.
"In 2020 and 2021, the prolonged Covid-19 pandemic dealt a heavy blow to the entire economy and the construction industry in particular. HBC’s revenue plunged by 40%,” he said.
Negative global developments and in Vietnam in particular have left construction businesses, including HBC, struggling even more, he added.
Last year, for the first time, Hoa Binh suffered a loss of over VND2.57 trillion ($109.2 million). Particularly, its provision for bad receivable debts amounted to over VND2.06 trillion ($87.55 million).
Hai admitted that he had not fulfilled his obligation to develop Hoa Binh as expected, failing to meet the trust and expectations of shareholders. He also took responsibility for a number of scandals that seriously affected the reputation of the board of directors and the Hoa Binh brand, which had long been praised for a corporate culture imbued with humanity and peace.
"However, I am not ashamed of myself or anyone else since I have done all I can to help the company overcome these difficulties over the years. My decisions were all made on the principle of protecting the best interests of shareholders, even though sometimes I had to sacrifice my own interests," he said.
The company chairman hoped to receive sympathy and solidarity from shareholders to help Hoa Binh weather the storm for growth.
According to him, Hoa Binh had taken a step back to renew with a comprehensive restructuring strategy focusing on finance, human resources, products and markets, management systems, and its network of members and associated companies.
Hoa Binh reported a net loss of more than VND440 billion ($18.75 million) in the first three months of 2023, marking its second quarterly loss in a row. In the same period, its revenue plunged nearly 60% year-on-year to VND1.2 trillion ($51.14 million).
At the end of Q1/2023, its accumulated losses of more than VND1.1 trillion ($46.88 million) exceeded its charter capital (VND2.74 trillion) by more than 40%.
On May 17, the Ho Chi Minh Stock Exchange announced the transfer of HBC shares of Hoa Binh from controlled to restricted trading starting May 23, because the company had delayed the submission of its 2022 audited financial statement by more than 45 days.
HBC closed the Tuesday session at VND9,460 ($0.4), up 5.23%.