Accordingly, CTCP Sao Hom Nha Trang was newly established based on the conversion of the organization and operation of Sao Hom Nha Trang Limited Company with a charter capital of VND 727 billion, while inheriting all the rights, obligations, and assets of Sao Hom Nha Trang Limited Company.
The leadership of OCH also approved the subsidiary’s plan to issue private shares to raise an additional VND 166 billion in capital through cash contributions. Following this, OCH will hold 56 million shares of Sao Hom Nha Trang, equivalent to 77.13% of its charter capital, down from 100% previously.
The OCH Board of Directors appointed Ms. Tran Thanh Ha to continue as Director and legal representative of the Sao Hom Nha Trang subsidiary.
In addition, the resolution also approved the settlement of debts between OCH, Sao Hom Nha Trang Limited Company, and Sao Hom Nha Trang’s lender. The debt settlement value does not exceed 35% of OCH’s total assets as reported in its latest audited/reviewed financial statements.
In 2023, Sao Hom Nha Trang recorded a total revenue of approximately VND 40 billion, up 34% from 2022, but posted a post-tax loss of nearly VND 73 billion due to the international market’s return to Nha Trang falling short of expectations.
According to OCH, the StarCity Nha Trang Hotel, which has been managed by Sao Hom Nha Trang since its opening in 2016, continued to incur losses in 2023, leading to a significant decline in owner’s equity. Nevertheless, hotel operations generated sufficient revenue to cover expenses associated with regular activities, hotel operations, land rent, and the purchase of tools to enhance the hotel’s service quality and image.
“With the deterioration of the physical infrastructure over the years without major renovations, the hotel proposes to seek capital support from the parent company for repairs, upgrades, and improvements to enhance its service quality,” OCH stated in its 2023 annual report. Previously, OCH had intended to divest its entire stake in Sao Hom Nha Trang to its parent company, Ocean Group Joint Stock Company (which owns 55.6% of OCH).
StarCity Nha Trang Hotel
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As for OCH, the financial results for the second quarter of 2024 remained unfavorable despite a 3% increase in revenue year-on-year, reaching VND 151 billion. Interest expenses of more than VND 26 billion, six times higher, resulted in a net loss of nearly VND 5 billion, compared to a profit of VND 47 billion in the same period last year; thus, accumulating a net loss of VND 651 billion.
For the first six months of the year, revenue reached VND 269 billion, a slight decrease of 3%, with a net loss of nearly VND 27 billion. OCH has achieved only 26% of its revenue target and is far from its goal of a post-tax profit of VND 42.6 billion.
At the 2024 Annual General Meeting of Shareholders, the company’s leadership acknowledged setting a much lower target than the previous year due to interest rate expenses and believed that “there is currently no incentive for development,” making it challenging to achieve significant growth. They explained that OCH’s profits heavily depend on the food sector, while the hotel business has been inefficient post-COVID-19, and the tourism market has not fully recovered.
“We identify that our growth momentum in the coming time will be through mergers and acquisitions (M&A),” a leader shared, and assessed that raising capital in the current context would disadvantage shareholders. Hence, they decided to opt for bank loans. Regarding the hotel segment, OCH will provide financial support within a certain limit, mainly for periodic upgrades and renovations.
As of the end of June 2024, OCH’s ownership ratios in its subsidiaries remained unchanged from the beginning of the year. Notable subsidiaries include Tan Viet (51.42%, hotel business), Banh Givral (50.77%, bakery and confectionery business), Kem Trang Tien (99.81%, dairy products business), Viptour Togi (86.13%, hotel business), and Kem Tin Phat (99.68%, dairy products business), among others.
| Quarterly net profit and interest expense of OCH from 2019 to present |
Tu Kinh
Every day, Trần Đình Long, the owner of Hòa Phát, has to shoulder nearly 10 billion dong in loan interest.
In 2023, Hoa Phat’s borrowing costs amounted to nearly 3.6 trillion dong, increasing by over 16% compared to 2022 and reaching a record high since its inception.
