Vietnam steel major SMC remains bogged down with difficulties

By My Ha, Minh Hue
Thu, October 31, 2024 | 10:41 am GMT+7

Steel manufacturer SMC Trading Investment JSC has been actively selling assets to generate cash for debt repayment and maintain operations since the beginning of this year.

Steel products of SMC Trading Investment JSC. Photo courtesy of the company.

Steel products of SMC Trading Investment JSC. Photo courtesy of the company.

The company's bad debts have decreased, but the reduction is not substantial, with total non-performing loans still hovering around VND1.3 trillion ($51.4 million).

SMC, listed on the Ho Chi Minh Stock Exchange as SMC, is a leading steel enterprise in southern Vietnam, boasting annual revenues comparable to industry giants like Nam Kim Steel (NKG) and Dong A Steel (GDA).

In contrast to other steel firms that reported bottomed-out profits in 2022 and began to recover in 2023, SMC has recorded two consecutive years of losses, with the 2023 figure even worse than that of 2022.

In addition to the downturn in the steel industry during 2022-2023, SMC has been heavily impacted by slow-moving debts, which have hampered its business operations and cash flow.

By the end of 2023, the company’s bad debts surged from VND98 billion to over VND1.31 trillion ($51.9 million), with recoverable value estimated at only VND740 billion. The need for large provisions was a key factor contributing to SMC's substantial losses last year.

During its AGM in April, vice chairwoman and CEO Nguyen Ngoc Y Nhi stated that the leadership is actively addressing debts through cash settlements, stock swaps, and accepting assets to offset debts. The goal is to resolve these debts within the year to avoid additional provisions (about VND300 billion or $11.86 million), affecting its profits.

As of September 30, 2023, SMC had successfully resolved debts with Hoa Binh Construction Group (HBC) by swapping for over 10 million shares valued at VND104.8 billion ($4.14 million), or VND10,000 ($0.4) per share.

However, HBC shares were recently delisted and now trade on the Unlisted Public Companies Market (UPCoM), with its price halving to VND5,100 (20 U.S. cents) per share. Consequently, SMC has set aside VND24.3 billion ($960,000) in provisions for this investment.

Meanwhile, SMC's non-performing loans remain high at VND1.29 trillion ($51 million), accounting for 20% of total assets, with provisions amounting to VND559 billion.

Major debtors include Delta-Valley Binh Thuan (VND441 billion), Da Lat Valley Real Estate (VND169 billion), and The Forest City (VND131.5 billion, all belonging to the Novaland ecosystem (NVL).

Earning profit from asset sales

The freshly released Q3 financial statement reveals some improvements, albeit still underwhelming.

Its revenue reached VND2.28 trillion ($90.14 million), a 28% year-on-year decrease. However, a 29% reduction in cost of goods sold resulted in a gross profit of VND10 billion ($395,336), a notable recovery from a loss of VND41 billion in the same period last year.

Despite cutting financial, selling, and administrative costs, SMC recorded a net loss of VND79 billion ($3.12 million), an improvement from the VND164 billion loss reported in the same quarter of the previous year.

For the first nine months, SMC reported total revenue of VND6.75 trillion ($266.85 million), down 36% year-on-year, while its net profit stood at VND22 billion ($869,739), contrasting with a loss of VND549 billion in the same period last year.

These results are still far from the respective revenue and after-tax profit targets of VND13.5 trillion ($533.7 million) and VND80 billion ($3.3 million) approved by shareholders.

Statistics indicated that SMC’s core business activities saw both output and revenue declining. The company’s profitability largely came from financial activities, with revenue soaring from VND91 billion to VND237 billion ($9.37 million) and expenses falling from VND267 billion to VND168 billion, primarily due to reduced interest costs.

In the nine months, SMC sold several assets, including over 13.1 million shares of Nam Kim Steel for a profit of VND215 billion ($8.5 million) and an office building in Ho Chi Minh City for VND170 billion.

In late September, SMC offered for sale land use rights and associated assets in SMC Danang Company Limited for VND96 billion. Recently, SMC announced the transfer of a receivable worth VND12.6 billion from Beton 6 JSC to an individual for VND3 billion.

These asset liquidations have helped reduce SMC’s liabilities by over VND1.1 trillion to VND4.27 trillion ($168.8 million), with loans decreasing by more than VND600 billion.

In addition to settling some bank debts, the company has paid VND199 billion ($7.87 million) in bonds due this year, leaving a remaining obligation of VND113 billion in bonds maturing next year.

In the stock market, SMC closed Wednesday at VND7,350 ($0.29) per share.

Comments (0)
  • Read More
Halal market presents major opportunities for Vietnamese businesses

Halal market presents major opportunities for Vietnamese businesses

The global Halal market is projected to reach $5 trillion by 2030, with Malaysia alone expected to hit $113.2 billion, said Shariza binti Abdul Rasheed, Halal product manager at Maybank Malaysia.

Economy - Thu, August 7, 2025 | 9:18 pm GMT+7

Steel major Hoa Phat to pour extra $130 mln into central Vietnam plant

Steel major Hoa Phat to pour extra $130 mln into central Vietnam plant

Vietnam’s leading steelmaker, Hoa Phat Group (HoSE: HPG), will increase investment in its Dung Quat 2 iron and steel production complex by VND3.4 trillion ($129.7 million) as part of an expansion plan.

Industries - Thu, August 7, 2025 | 8:03 pm GMT+7

Vietnam’s army-backed construction firm proposes 14 offshore wind power projects

Vietnam’s army-backed construction firm proposes 14 offshore wind power projects

Lung Lo Construction Corporation (LLC), under the Ministry of National Defense, has submitted investment proposals for 14 offshore wind power projects with a combined capacity of 9,000 MW.

Energy - Thu, August 7, 2025 | 5:07 pm GMT+7

Vietnam's agri major Hoang Anh Gia Lai fined for bond information disclosure failure

Vietnam's agri major Hoang Anh Gia Lai fined for bond information disclosure failure

Vietnam's agri major Hoang Anh Gia Lai JSC has been fined VND92.5 million ($3,528) for failing to disclose bond-related information as required by law.

Companies - Thu, August 7, 2025 | 4:31 pm GMT+7

Northern Vietnam province accelerates $2.2 bln LNG-to-power project

Northern Vietnam province accelerates $2.2 bln LNG-to-power project

Quang Ninh province will hand over 4.9 hectares of reclaimed land to the Quang Ninh LNG-fuelled power plant project before August 11, local authorities stated at a meeting on Wednesday.

Energy - Thu, August 7, 2025 | 4:17 pm GMT+7

Vietnam's seafood firms ride profit wave ahead of US tariff hike

Vietnam's seafood firms ride profit wave ahead of US tariff hike

Vietnam’s seafood companies reported surging profits in Q2/2025, driven by importers ramping up purchases ahead of new U.S. reciprocal tariffs.

Economy - Thu, August 7, 2025 | 2:21 pm GMT+7

Le Anh Tuan appointed new CEO of Dragon Capital Vietfund Management JSC

Le Anh Tuan appointed new CEO of Dragon Capital Vietfund Management JSC

Dragon Capital Group, Vietnam's largest asset manager, has appointed Le Anh Tuan as CEO of its arm Dragon Capital Vietfund Management Joint Stock Company (DCVFM), starting from October 1, 2025.

Companies - Thu, August 7, 2025 | 2:01 pm GMT+7

Indonesia, Malaysia, Thailand expand local currency transaction network

Indonesia, Malaysia, Thailand expand local currency transaction network

Bank Indonesia, Bank Negara Malaysia, and Bank of Thailand have added new Appointed Cross Currency Dealer (ACCD) participating banks to broaden services for bilateral transactions in local currencies across the three nations, Bank Indonesia said in a statement on Tuesday.

Southeast Asia - Thu, August 7, 2025 | 12:48 pm GMT+7

ASEAN to sign MoU on regional power grid implementation

ASEAN to sign MoU on regional power grid implementation

ASEAN member states are set to sign an MoU on the implementation of the ASEAN Power Grid during the bloc’s Energy Ministers’ Meeting this October.

Southeast Asia - Thu, August 7, 2025 | 12:43 pm GMT+7

Vietnam overtakes Thailand to become world's second-largest rice exporter

Vietnam overtakes Thailand to become world's second-largest rice exporter

Vietnam has outranked Thailand as the world’s second-largest rice exporter in the first half of 2025, Thai PBS reported on August 3, citing the Thai Rice Exporters Association.

Companies - Thu, August 7, 2025 | 12:41 pm GMT+7

Vietnam posts trade surplus of $10.18 bln in 7 months

Vietnam posts trade surplus of $10.18 bln in 7 months

Vietnam’s export earnings grew by 14.8% to $262.44 billion in the first seven months of this year, while its import turnover rose by 17.9% to $252.26 billion, resulting in a trade surplus of $10.18 billion.

Economy - Thu, August 7, 2025 | 12:19 pm GMT+7

Malaysia pledges big purchases, investments with US

Malaysia pledges big purchases, investments with US

Malaysia has agreed to buy and invest over $240 billion (MYR1.02 trillion) in the U.S. to help reduce the trade gap between the two countries.

Southeast Asia - Thu, August 7, 2025 | 12:08 pm GMT+7

Vietnam's leading property developer Novaland to issue 152 mln shares to settle $229 mln debt

Vietnam's leading property developer Novaland to issue 152 mln shares to settle $229 mln debt

Novaland, a major real estate developer in Vietnam, plans to issue nearly 152 million new shares to swap more than VND6 trillion ($228.8 million) worth of bond principal.

Companies - Thu, August 7, 2025 | 10:11 am GMT+7

Vietnam's FDI capital disbursement hits five-year record high despite US tariff turmoil

Vietnam's FDI capital disbursement hits five-year record high despite US tariff turmoil

Disbursed foreign direct investment (FDI) capital in Vietnam reached $13.6 billion in Jan-July, up 8.4% year-on-year, despite U.S. tariff concerns.

Economy - Thu, August 7, 2025 | 9:57 am GMT+7

Malaysia steps up efforts to explore nuclear energy potential

Malaysia steps up efforts to explore nuclear energy potential

Malaysia’s Minister of Science, Technology and Innovation Chang Lih Kang on Wednesday reaffirmed his ministry’s commitment to enhancing cooperation with the Ministry of Energy Transition and Water Transformation (PETRA) in exploring the potential of nuclear energy.

Southeast Asia - Thu, August 7, 2025 | 8:10 am GMT+7

Indonesia's economy grows faster than expected

Indonesia's economy grows faster than expected

Indonesia's economy expanded by 5.12% year-on-year in Q2/2025, up from 4.87% in the previous quarter, exceeding the forecasts of many economic organizations, which had previously projected a rate of less than 5%, according to Statistics Indonesia (BPS).

Southeast Asia - Thu, August 7, 2025 | 8:07 am GMT+7