On the morning of March 18, 2024, Hoa Sen Corporation (HSG) held its annual general meeting of shareholders.
The Board of Directors also proposed the issuance of 5 million ESOP shares at a price of VND 10,000 per share to executives, managers, leaders, and key staff members of the company. These shares will be restricted from transfer for one year. The implementation period is expected to start from the date of approval at the annual general meeting of shareholders until the nearest upcoming annual general meeting of shareholders.
Chairman Le Phuoc Vu shared,
: “The people working at Hoa Sen face a lot of pressure and hard work, with income only limited to their salaries. This ESOP is a form of compensation, a well-deserved reward, in accordance with the law. It is also an investment for the future, to provide reassurance for their dedication to the corporation”.
During the discussion session, when a shareholder suggested a higher dividend payout, Chairman Le Phuoc Vu, despite the company’s strong cash flow, still advocated for a more defensive approach.
“At the end of last year’s general meeting, I mentioned that the profits of 1 trillion dong were a success and a deserving reward for the management board because we incurred a loss of over 800 billion dong in the first quarter. We are both an importer and a manufacturer, involved in distribution and export, so our inventory must always guarantee four months’ worth of supply.
The last three quarters of last year experienced price fluctuations, particularly a weakened domestic and export demand. Making a profit of 30 billion dong was an extraordinary effort, with no more long-term debts, and depreciation amounting to approximately 1,100 billion dong, corresponding to a positive cash flow.
If, for some reason, we were forced to abruptly close, we would still have enough money to repay the bank and have a surplus of 600-700 billion dong.
”
, Mr. Vu stated.
HSG does not borrow at low-interest rates and deposit the money to earn the difference, as it “respects financial institutions”.
It is known that HSG is currently borrowing from a global bank (top 5 in the world) in Vietnamese dong, with an interest rate of 2.3% per year and a term of 4 months.
Chairman of HSG even revealed that the company’s credit limit is currently at 17,000 – 18,000 billion dong, with an average interest rate of 2.1% per year. HSG respects financial institutions and therefore does not borrow money and then deposit it in a bank to earn a 4-5% difference.
It is important to emphasize that leveraging low-interest-rate borrowing for investment purposes, including depositing money to earn the difference, is not uncommon. In the market, many large listed corporations use this “corporate finance” tool to generate financial income.
Photo: HSG’s annual general meeting on March 18, 2024.
HSG wants to invest in various sectors, including finance and banking.
Regarding HSG, the current geopolitical situation is very complex, and at present, one should be more defensively minded rather than complacent. There is still over 4,000 billion dong in retained earnings, but stability must be prioritized, with retained earnings reinvested for the future. If more than 5% is distributed, equivalent to about 300 billion dong, it means using the accumulated profits from previous years.
In the 2024 – 2029 strategy, HSG is considering expanding its business activities to various sectors such as finance, banking, securities, insurance, real estate, precision engineering and manufacturing, semiconductor technology, real estate (offices, housing, residential areas, urban areas), education and training, healthcare, eco-tourism, resorts, financial investment, M&A culture, art, and event organization…
The maximum investment amount for these expanded areas does not exceed 5,000 billion dong. While the State is determined to clean up the economy and foster true entrepreneurs, Mr. Vu believes this is an opportunity for HSG, not leaving any sector behind.
Continuing the IPO plan, aiming to list shares of Hoa Sen Plastic and Hoa Sen Steel Pipe.
In its core business area, after Hoa Sen Home, a building materials and interior superstore operated independently by Hoa Sen Plastic Joint Stock Company, has been stable and independent, the corporation plans to transfer the entire steel pipe manufacturing and business segment to Hoa Sen Steel Pipe Joint Stock Company (established based on the conversion of a wholly-owned subsidiary owned by Hoa Sen) within the next 5 years.
Specifically, Hoa Sen Phu My Co., Ltd. will be considered for conversion into Hoa Sen Steel Pipe Joint Stock Company, in which the Group will own 99% of the charter capital. The detail plan for the conversion of Hoa Sen Phu My Co., Ltd. into Hoa Sen Steel Pipe Joint Stock Company has been assigned to the Board of Directors for construction, completion, and implementation.
Hoa Sen Steel Pipe Joint Stock Company will inherit all infrastructure serving steel pipe manufacturing and business activities (land, factories, machinery and equipment, production lines…) and become the managing entity in the steel pipe manufacturing and business segment.
If conditions are favorable, HSG will develop an IPO plan and list shares of Hoa Sen Plastic Joint Stock Company and Hoa Sen Steel Pipe Joint Stock Company.
