“Steel Giant Nam Kim Prepares for Equity Offering to Fund $68 Million Factory Expansion”

According to the recently published resolution, the Nam Kim Board of Directors has approved a plan to issue a maximum of 131.6 million shares to existing shareholders at VND 12,000 per share. The entitlement ratio is 2:1, meaning that for every 2 shares owned, shareholders will have the right to purchase 1 new share.

The nearly VND 1,600 billion raised will be used for the Nam Kim Phu My Factory Project in Ba Ria-Vung Tau Province. This project includes a zinc plating line with a capacity of 350,000 tons/year, 2 aluminum-zinc alloy plating lines with a capacity of 300,000 tons/year and 150,000 tons/year, along with a color plating line of 150,000 tons/year. The total investment capital for phase 1 is VND 4,500 billion.

At the 2024 Annual General Meeting of Shareholders held in late April, Chairman of Thep Nam Kim, Ho Minh Quang, shared that the factory has received a construction permit and is expected to be operational by Q4 2025 or Q1 2026. The projected capacity is expected to reach 100% by 2027, increasing the company’s capacity from 1 million tons/year to 1.6 million tons/year.

General Director Vo Hoang Vu stated that the construction of the new factory aims to anticipate the recovery of the global economy in 2025-2026. The new factory will focus on higher-quality products, serving auxiliary industries, mechanical auxiliaries, electrical appliances, and the automotive industry.

Nam Kim specializes in coated steel production and currently manages and operates 4 factories with a total coating capacity of 1.2 million tons/year, accounting for 17.4% market share of coated steel. The distribution system of Nam Kim steel is mainly in the South, covering Ho Chi Minh City, Dong Nai, and neighboring provinces. Export is the main market for NKG, accounting for about 60% of revenue.

In a newly released report by DSC Securities Company, DSC experts opined that the Phu My Factory could be a financial burden for Nam Kim in the next 2 years.

“The construction of the factory and the increase in capacity are reasonable steps taken by the management to ensure long-term growth. However, in terms of financial capacity, NKG is not particularly strong, and the development of such a large-scale project will rely heavily on debt,” the DSC report stated.

Specifically, according to the plan, the total investment capital for phase 1 is VND 4,500 billion, of which VND 3,150 billion is loan capital. DSC calculated that interest expense could increase by 13% CAGR from late 2023 to 2026. However, DSC expects this financial pressure to be effectively addressed as NKG’s business performance may improve when the real estate market enters a new cycle, along with the evident recovery of export markets.