Investors are fleeing Hoa Sen?

  The profit of four years ago, high debt pressure, stock prices plummeted, investors began selling capital, showing that Hoa Sen Group of...

 The profit of four years ago, high debt pressure, stock prices plummeted, investors began selling capital, showing that Hoa Sen Group of the great Le Phuoc Vu is on the long slip.
In the first quarter, Hoa Sen Group reported revenue growth of 23% over the previous year but profit was only 87 billion dong (equal to 1/5 of the same period). The plunge in profits is a result of many experts' assessment that the increase in debt to consolidate market share makes Hoa Sen's rate unchanged. Along with that, the stock price of enterprises also decreased, investors continuously withdraw capital.Loans to consolidate market share
The reason for this year's profit decrease deeply compared with the year is explained by Hoa Sen operating costs increased simultaneously. At the same time, the market share of some key products of the business is seriously threatened by other competitors, which led Lotus to borrow more to strengthen its market share.
Specifically, interest expense increased by 70%, when Hoa Sen short-term debt is 12,646 billion, up more than 3.600 billion compared to the beginning of the period. In addition to interest expenses, selling expenses also increased 35%, management costs increased nearly 90% over the same period.


With the main product being galvanized sheet, the market share of the enterprise from 40.9% in 2012 was down 33.1% in 2016. The trend of reducing market share is alarming, and another important cause is the speed The growth rate of investment of enterprises is lower than that of the whole industry.
Debt has soared from 8.18 trillion dong at the end of fiscal 2016 to 16.268 trillion dong at the end of 2017, an increase of 99%, very high compared to the level of debt of 25% in 2016.
The debt-to-market strategy of losing Lotus is partially offset by 2017, with a market share of 34.3%. However, the low share of the market is that after-tax profit fell 11.5% from VND1,504 billion in 2016 to VND1,331 billion in 2017. This negative index extended to the beginning of the year. Now, with Q1 report only 87 billion profit (lowest in 4 years).
Many experts said that Hoa Sen had to put all its strength to protect the steel sheet market by using all the debt to invest, which pushed the debt ratio up. In addition, lowering the price, increasing the discount for customers to gain market share also makes the accumulation of capital through profitability down.

 
Stock prices fell free, shareholders fled and skeptics
The deteriorating financial index has had a negative impact on stock prices. HSG's HSG shares suddenly fall sharply in 2017, and worse from the beginning of 2018. By the end of the last trading session of 2017, HSG closed at VND23,970 / share, down VND3,890 per share, equivalent to 14% over the end of 2016.

 
 Investors are skeptical about Hoa Sen Group's growth potential in the future.

 
In the first five months of this year, HSG's shares dropped by 12,420 dong per share, or 51.8 percent, to 11,550 dong per share, putting pressure on shareholders.
During the same period, Hoa Sen's market capitalized at VND4,347 billion.
Stock prices plummeted in a short span of time, making investors' confidence seem to falter, and many of them are planning to run away.
Tam Thien Tam Joint Stock Company, where Hoang Thi Huong Xuan (wife of Mr. Le Phuoc Vu) was the president, registered to sell all 5.49% of the equity in Hoa Sen at the price of HSG stock the lowest in the enterprise history.
Surprisingly, shortly before, Tam Thien Tam Company completed the sale of 5 million shares of HSG, reducing its post-trading ownership to more than 19.21 million units, equivalent to 5.49%. Not to stop, the company continues to register to sell more than 19.21 million shares of HSG remaining under the agreement. Transaction time is from May 23 to June 21.
Not only the company "relatives" divestment but plans to withdraw from the Lotus also took place.
Specifically, from 2014, Vietnam Enterprise Investments Limited, the largest foreign investor in Hoa Sen, sold 300,000 HSG shares. After trading, with just 7.9 million HSG shares, equivalent to 2.25% of the company's capital, this fund is no longer a major shareholder of Hoa Sen.

 
 Shares of business giant Le Phuoc Vu lao slope strongly from 2017. Photo: HSG.

 
In February this year, Amersham Industries Limited sold 600,000 shares of HSG. Amersham Industries Limited is fortunate to have a quick exit and earn about VND14 billion.
Shareholders of Hoa Sen Group were also skeptical about HSG share trading activities of Mr. Le Phuoc Vu. According to statistics, HSG has a high shareholder structure, in which Le Phuoc Vu, Chairman of the Board of Directors and other related parties hold nearly 43% of the outstanding votes. However, focusing the power at the hands of key executives will make small shareholders risky, because there is no voice in important decisions.
The most noticeable risk for HSG's stockholders is that stock prices are almost unchanged in 2017, or even down 20% since the beginning of 2018. However, contrary to the worry of losses of investors, Vu's account increased sharply thanks to the waves of HSG shares.
For example, in June, 2017, when HSG price recovered after a strong fall from the VND 50,000 / share, Vu put the order to sell nearly 9.6 million shares and collected nearly 310 billion. Four months later, he bought 1 million shares when HSG had a strong discount chain.
Even businesses owned by Mr. Vu are also profitable thanks to surfing HSG.
Typically, Tam Hy Company sold 10 million shares in the price increase of HSG, while Lotus Investment Company Limited bought the bottom successfully in the stock price down.
According to Mr. Vu, he bought into HSG stock only to invest, not for other purposes. However, many times thanks to "buy low, sell high" so, shareholders have the right to doubt about the investment purpose of Mr. Vu.

 
 HSG stock movements so far this year.
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High Tech Brain: Investors are fleeing Hoa Sen?
Investors are fleeing Hoa Sen?
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