In 2024, HBC set a target revenue of 10,800 billion VND and a profit after tax of 433 billion VND.
790 BILLION VND DEBT CONVERSION
The 2024 annual Shareholders’ Meeting of Hoa Binh Construction Group Joint Stock Company (Hoa Binh Construction – code HBC) took place successfully on April 25, 2024.
In his opening speech at the meeting, Mr. Le Viet Hai, Chairman of HBC’s Board of Directors, expressed his deep gratitude to the subcontractors who agreed to convert their debts. The total value of the issuance for debt conversion is expected to reach 790 billion VND.
The Group has just gone through a stormy 2023, the most difficult year in Hoa Binh’s 36-year development journey. The difficulties arose since 2017 when the construction industry’s legal regulations were tightened. Mr. Hai also said that many large contractors competed unfairly with the aim of winning the bid packages.
At the end of 2023, Hoa Binh recorded revenue of 7,537.1 billion VND and a loss of 1,115.3 billion VND. In 2022, Hoa Binh also lost 2,609.8 billion VND. Consequently, its equity is now only 93 billion VND. Its payable debt is 15,156.5 billion VND, 163 times its equity.
In view of the poor business results in 2023, Mr. Hai accepted responsibility. However, Mr. Hai affirmed that he always considered Hoa Binh as his “flesh and blood”, utilizing all resources, both personal and family, to steer the Hoa Binh ship to ensure the highest benefits for shareholders.
“In danger, there is opportunity, we have found “golden” friends, more valuable than what we have lost,” said Mr. Hai.
Reporting to shareholders on the business plan for 2024 – 2026, Mr. Le Van Nam, General Director of HBC, said that in 2024, the revenue would be 10,800 billion VND, of which the backlog from 2023 would be 5,400 billion VND, the revenue recognized from projects nominated in 2024 would be 2,600/7,000 billion VND, and the revenue from newly bid projects would be 2,800/7,500 billion VND.
In 2025, the Group’s revenue is expected to be 12,000 billion VND and in 2026, it will be 15,900 billion VND.
In the next 10 years, Hoa Binh will increase its equity to over 10,000 billion VND, promote construction in foreign markets, and aim to be among the Top 50 largest construction companies in the world.
HBC’s General Director proposed 08 solutions to increase equity through issuing shares for debt conversion, selling projects, and strengthening debt collection, which would increase equity from the current 149 billion VND to 4,765 billion VND.
In addition, Hoa Binh plans to issue an additional 200 million shares at a price of 12,000 VND per share to strategic shareholders. The equity by 2026 is expected to be 7,165 billion VND.
PROFIT OF 56 BILLION VND IN Q1/2024
In the discussion section, in response to a shareholder’s question about whether HBC shares would be delisted, Mr. Le Viet Hai, Chairman of HBC’s Board of Directors, said that so far, HBC still meets the listing conditions. The company has consulted with securities companies and many financial advisory firms.
Regarding the issue of the share price on the floor being traded at 7,000 – 8,000 VND/share, but the issue price to strategic shareholders is up to 10,000 VND/share, Mr. Hai said that subcontractors and suppliers want HBC to continue operating, so they agree to convert shares at a price higher than the market price. They believe that when HBC overcomes its difficulties, the share price will exceed VND 30,000.
The intrinsic value (book value) of HBC shares is actually over VND 20,000, and if the intangible value is added, it is over VND 26,000. That is even in the context of the shares being under special control. Therefore, these decisions are both emotional and based on expectations of future benefits.
Regarding the payment of fees for collateral accounts, Mr. Hai said that HBC never intended to occupy subcontractors’ capital. This is the first time that HBC has had to extend the payment of the first remaining investment debt; all previous payments were made very properly.
Regarding capital increase and share dilution, Mr. Le Van Nam, HBC’s General Director, said that capital increase would naturally lead to dilution, but overall, investors would benefit because HBC’s book value is currently around more than 500 VND/share. If the shares are issued at a price of 10,000 VND/share, existing shareholders will benefit. ROE was negative in 2022 and 2023 due to losses.
Currently, Mr. Le Viet Hai’s shareholding ratio has decreased, which will affect his ability to steer the company. When asked if it would be similar to the case of CTD, Mr. Le Van Nam said that if there were partners willing to buy 200 million shares and hold a higher percentage than Mr. Hai, he thought Mr. Hai would be ready. Mr. Hai is willing to sacrifice his personal interests for the development of the Group, so that Hoa Binh can regain its position as Vietnam’s leading construction group.
Mr. Le Van Nam said that in the first quarter of 2024, the company no longer had any outstanding salary debts and was aggressively collecting debts, especially by acquiring assets. The company has basically balanced its cash flow, not 100%, but 90-95%.
Regarding the ability to continue operating, the company is still operating normally. Each project runs on its own project account, so when one project is delayed, only the cash flow of that particular project is delayed.
In the first quarter of 2024, HBC had a profit of 56 billion VND, which is not much but is very important, so that we can determine the plan for the next 5 years and 10 years. The most difficult times are over; HBC will carry out its mission to not only restore its position but also embark on a journey to bring Vietnamese businesses abroad.
In addition, HBC’s leaders also informed shareholders about the status of overseas projects, including two projects in the US and projects in Kenya.
At the end of the General Meeting of Shareholders, all the proposals were approved.
