Hoa Sen Group plans large-scale restructuring
At its recent shareholders’ meeting, giant steel maker Hoa Sen Group (HoSE: HSG) received approval to restructure the company in the parent and subsidiaries model.
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HSG is going to transfer the ownership of all plants and assets to its regional joint-stock subsidiaries. After a while, these subsidiaries are going to be listed on their own.
According to HSG’s annual report for the 2015-2016 fiscal year, the company’s output reached 1.24 million tons, up 22% since last year. Meanwhile, revenue was VND17.9 trillion (US$778 million), up 2.6% on-year.
After-tax profit was VND1.5 trillion (US$66.5 million), up 130% from the last fiscal year. HSG is leading the domestic steel and zinc-coated steel markets, while expanding internationally with distribution channels spanning 65 countries and territories, earning nearly 40% of its revenue from exports.
For the 2016-2017 fiscal year, HSG targets VND23 trillion (US$1 billion) in revenue, sales of 1.57 million tons, and after-tax profit of VND1.65 trillion (US$73.1 million).
Established in August 2001, HSG is a leading steel manufacturer in Vietnam and Southeast Asia. The group makes about 40% of all domestic steel sheets.
In 2016, HSG started building two million-dollar steel plants and added a mega project to the pipeline.
In January, HSG started the construction of the 12.4-hectare Hoa Sen Nhon Hoi factory in Nhon Hoi Economic Zone in the central province of Binh Dinh. The facility is expected to commence operation in June 2017 and supply 180,000 tonnes of galvanised steel sheets and zinc-aluminium alloys, 90,000 tonnes of colour-coated steel sheets, and 200,000 tonnes of cold-rolled steel units on an annual basis.
In March, it started construction of the 20.4-hectare Hoa Sen Ha Nam steel factory (capitals?), an investment of US$134.3 million in total, which will have an annual capacity of over 800,000 tonnes on completion. Located in Kien Khe Industrial Cluster in the northern province of Ha Nam, it began construction in March and will be completed in September 2018.
In August, Hoa Sen was approved to build a giant steel complex with a capacity of 16 million tonnes a year in the south-central province of Ninh Thuan.
At a cost of US$10.6 billion, the plant will be the largest steel plant in Vietnam and will be built from 2017 to 2031 in five stages.
The first stage is expected to begin operation in 2019 with an output of 1.5 million tonnes of steel a year.
Many experts have voiced concerns over the project, saying that there is already a global surplus of steel and that the project is likely to cause environmental pollution, especially after the environmental disaster caused by Formosa’s US$10.5-billion steel complex in Ha Tinh.
VinaCapital, one of Vietnam’s largest asset management companies and owner of a 0.5% stake in Hoa Sen Group, said if Hoa Sen went ahead without proof of satisfactory environmental protection measures, it would reconsider continuing to hold shares.
Meanwhile, Hoa Sen defended the project with promises to use modern, eco-friendly technologies as well as waste treatment and recycling systems. Officials pointed to the estimated 45,000 jobs the project offers and promised to be stricter in evaluating its environmental impact.
