HAGL’s Billion Dollar “Weapon”

Eximbank might not be the only bank that will waive the interest on HAGL's loans in the near future.


Mr. Doan Nguyen Duc, Chairman of HAGL (standing in the middle)

Main content:

  • – The loan interest of Eximbank, which was cleared by 1,425 billion VND, was recorded as a revenue/profit of the company in the fourth quarter of 2023.
  • – HAGL made a profit of 1,108 billion VND after tax in the fourth quarter of 2023, contributing to the company’s total annual profit of 1,817 billion VND, a 62% increase compared to 2022.
  • – Despite the cleared loan, HAGL’s business situation is gradually improving.

As announced earlier, Hoang Anh Gia Lai Joint Stock Company (HAGL – HoSE: HAG) had its loan of 1,424 billion VND cleared by Eximbank in the fourth quarter of 2023. The cleared loan, which was previously recorded as an expense, helps HAGL recognize an equivalent revenue/profit.

The consolidated financial report for the fourth quarter of 2023 of HAGL showed a profit of 1,108 billion VND in the fourth quarter alone, with significant contributions from this item.

For the year 2023, HAGL made a profit of 1,817 billion VND, a 62% increase compared to 2022.

Clearing the loan became a “weapon” worth billions for HAGL in the past fourth quarter, and it may continue to contribute to the company’s future profits.

There is still room for clearing the loan.

The profit of 1,108 billion VND in the fourth quarter of 2023 is a record profit for HAGL in a quarter. The profit of 1,817 billion VND is also a record profit for the company in a year.

The company’s interest expense in 2023 was recorded at 1,154 billion VND. However, the company only paid a portion of that expense and continued to carry the remaining loan as an expense to be paid.

That is why, despite the cleared loan of 1,424 billion VND, HAGL’s loan expense at the end of the year still decreased by 686 billion VND compared to the beginning of the year, but it remained at 3,625 billion VND.

In the coming time, with a debt balance of billions of VND, if the company continues not to repay, the loan balance payable by HAGL will continue to increase.

Eximbank may not be the only bank that will clear the loan for HAGL.

In the shareholders’ meeting at the end of 2023, Chairman Doan Nguyen Duc said the company will clear all accumulated losses in the first half of 2024.

In evaluating HAGL’s business situation in the first half of 2024, to clear all accumulated losses (1,633 billion VND at the end of 2023), HAGL only has the option of clearing the loan, bringing about a sudden profit as the company did in the fourth quarter of last year.

Currently, HAGL has three main lines of business: pig breeding and banana farm, banana planting and export, durian. While the pig and banana lines of business are stable, any sudden profit for HAGL can only come from durian.

The majority of the company’s durian (1,000 hectares) is grown in Paksong – the highlands of Laos. With special geographical and weather conditions, Mr. Duc shared that durian harvested here is a late crop, usually harvested around October and November when the durian crop in the Western and Central Highlands has already passed. Durian also cannot bring about sudden profits for the company in the first half of this year.

The situation is improving.

Although clearing billions of VND in loan interest helps HAGL achieve a sudden profit, the improvement in HAGL’s business situation cannot be denied.

In 2022, HAGL actually reversed provisions (similar to booking profits when clearing the loan) of over 1,500 billion VND – significantly higher than the cleared loan amount in 2023.

Comparing the cleared loan in 2023 and the reversed provisions in 2022, the core business results of HAGL have improved significantly.

In the fourth quarter of 2023 alone, HAGL’s pig breeding and banana farm division suffered a loss of 130 billion VND as the market was challenging and pig prices plummeted. The loss in the pig breeding division of HAGL is also a common situation for businesses and farmers at the end of last year.

The fruit tree division of HAGL is becoming more stable and generating sustainable revenue and profit, compensating for the fluctuations in the pork market over the past year.

The fruit revenue of HAGL in 2023 reached 3,181 billion VND, a 48% increase compared to the same period. This result was achieved because the company acquired Le Me – a company with thousands of hectares of agricultural land, and recognized all the revenue from this subsidiary.

HAGL is working to pay off due debts, minimize borrowings, thereby reducing interest expenses and stabilizing the company’s cash flow.

The plan to issue an additional 130 million shares of HAGL has not been approved by the State Securities Commission, but it is quite feasible as HAG shares on the market are gradually approaching the 15,000 VND/share level, while the issue price is only 10,000 VND/share.

If the issuance plan succeeds, HAGL will have a significant source of funds to repay the loans, not solely relying on asset liquidation as before.

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