Accumulated losses exceed actual capital contribution, Hoa Binh Construction Group's shares are subject to delisting.

Hoa Binh Construction Group is one of the leading construction contractors in Vietnam, implementing Vinhomes Grand Park phase 3, Vinfast building, Dung Quat steel factory... - Photo: QUANG DINH

Recently, the Ho Chi Minh City Stock Exchange (HoSE) announced that it would delist HBC shares of Hoa Binh Construction Group Joint Stock Company according to regulations. Thus, in case of moving back to UPCoM, this code will be subject to higher price fluctuations, with a trading range of 15%/session, instead of 7%/session like the Ho Chi Minh City Stock Exchange.

Large accumulated losses

The reason for delisting is that Hoa Binh Construction Group has accumulated losses of up to VND 3,240 billion, exceeding the actual charter capital contributed by shareholders (VND 2,741 billion), as of the end of 2023.

In the annual report published earlier this year, Mr. Le Viet Hai - Chairman of the Board of Directors - said that the company had to go through a turbulent year 2023, with difficulties that had begun since 2017.

Last year, the company also started the year with an unexpected story, a "civil war" within the board of directors. He had intended to step back, but had to return to the position of chairman to steer the company. The company was able to overcome the "extremely difficult, life-threatening" situation.

During the difficult period, many close partners and investors also said they would create favorable conditions and assign new projects to the group. Subcontractors and strategic suppliers also sympathized and shared the risks.

Sell ​​off assets

Regarding the business picture, according to the financial report, in the first half of 2024, Hoa Binh Construction Group reaped more than 3,810 billion VND (+10%).

After deducting expenses, the company's net profit after tax was nearly VND740 billion, mainly due to asset liquidation and provision reversal. This profit improved sharply compared to the loss of more than VND710 billion in the same period last year, and exceeded the profit plan for the whole year by more than 70%.

At the middle of this year, Hoa Binh Construction's assets were over 15,600 billion VND, a significant increase compared to the beginning of the year. The company's accumulated loss was nearly 2,500 billion VND, equivalent to 72% of its charter capital. Financial debt was at 4,485 billion VND, nearly three times higher than its equity. The company had nearly 311 billion VND in cash and cash equivalents.

To relieve pressure, the company has also approved plans to issue shares, swap and repay debts to subcontractors, partners and suppliers.

On the stock market, HBC code is currently anchored at 7,250 VND/share, corresponding to a decrease of more than 8% in the past week, and a decrease of more than 22% in the past year.

Source: https://tuoitre.vn/lo-luy-ke-vuot-ca-von-thuc-gop-co-phieu-tap-doan-xay-dung-hoa-binh-vao-dien-bi-huy-niem-yet-20240727062004571.htm