Vietnam steel major SMC remains bogged down with difficulties
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.
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.
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