Steelmaker Nam Kim to raise $63 mln with new share issuance

Nam Kim Steel Corporation has restarted a plan to raise VND1.58 trillion ($63.3 million) through fresh share issuance for investing in a steel sheet factory in Ba Ria-Vung Tau province, southern Vietnam.

In documents prepared for the upcoming 2024 annual general meeting (AGM) of shareholders, the company’s board of directors said that a maximum of 131.6 million shares will be offered to existing shareholders at VND12,000 ($048) per share.

The capital raised will be invested in the Nam Kim Phu My steel sheet factory, it said.

In recent years, Nam Kim has increased its capital through dividends and share bonuses. In 2017, it issued 30 million private placement shares at VND27,000 ($1.08) per share. The main buyers were foreign investment funds and securities companies.

NKG shares are currently priced at around VND24,400 ($0.98) per share, an increase of 65% in the past year.

Nam Kim made plans to invest in the steel sheet factory project in 2022 and just received an investment registration certificate early this year. The factory will produce metal products made of steel sheets, galvanized sheets, and zinc-aluminum alloy galvanized steel.

The project includes a 350,000-ton galvanizing line, two Zinc-aluminum alloy galvanizing lines with a capacity of 300,000 tons per year each, and a 150,000-ton color coated corrugated iron line.

It will have a first phase investment of VND4.5 trillion ($180.32 million). The company has already contributed VND500 billion ($20.03 million) to the project, whose construction is expected to start in the second quarter of 2024.

In addition, the company will issue a maximum of 2.5 million Employment Stock Ownership Plan (ESOP) shares at VND10,000 ($0.4) apiece and 20% of bonus shares (nearly 52.7 million shares).

The board of directors expect the steel industry will continue to recover this year at a modest pace, with the U.S. Federal Reserve (Fed) maintaining high interest rates.

Therefore, in addition to increasing profits, consolidating and expanding partnerships will be a key part of its 2024 business strategy.

It also targets an output of 1 million tons, total revenues of VND21 trillion ($841.26 million) and pre-tax profits of VND420 billion ($16.8 million), up 38%, 20% and 2.4 times year-on-year, respectively.

In 2023, amid the steel market’s gradual recovery, Nam Kim recorded pre-tax profits of VND177 billion ($7.09 million), compared to a loss of VND107 billion in 2022.

To reserve capital for development investment, the board of directors has presented a plan to withhold cash dividends in 2023 and 2024.

Nam Kim's leaders said that the company had completely paid off its long-term debt last year and financial pressures are expected to reduce this year.

In a business breakthrough, the firm successfully exported a shipment of high-quality Zinmag corrugated iron sheets to Australia, opening up the prospect of penetrating deeper into the value chain of the galvanized steel industry in choosing markets such as North America and the E.U, the directors said.

NKG closed Monday at VND24,600 ($0.99) per share.