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The company’s management decided to conduct the buyback after a series of stock markets crashes sent the HSG stock stumbling even as its production and business remained stable, it said in a filing with the Ho Chi Minh Stock Exchange (HoSE).
Stock repurchases are often made by firms who feel their stocks are undervalued on the open market, when they want to reduce dilution from incentive compensation plans for employees, or to protect the company against a takeover threat.
HSG ticker lost over 6 percent in the last three consecutive sessions. It was trading at VND26,850 ($1.16) on Monday, but fell to VND21,850 by Thursday, an 18.6 percent plunge in just three days.
Hoa Sen said they planned to use funds from their share premium account to pay for the buyback at market price via both order matching and put-through options on the HoSE. Based on HSG’s VND22,000 price at 11.30 a.m. Friday, the total buyback is expected to be worth around VND480 billion.
Speaking at the steelmaker’s annual general meeting last week, chairman and founder Le Phuoc Vu had assured investors that they should not be too worried when stocks fall, as it can be a good buying opportunity.
Positive and stable business performance had resulted in HSG rising from VND7,000 from the start of 2019 to VND26,000 by year-end. With projected revenue growth in the coming years and restructured debt closing down on zero, the actual value of HSG should be even higher, he said.
According to HSG’s consolidated statements, the steelmaker recorded net revenues of VND27.53 trillion in its latest fiscal year, between July 1, 2019 and September 30, 2020, down 1.1 percent year-on-year.
But post-tax profits for the period jumped over 219 percent year-on-year to VND1.15 trillion, which Hoa Sen said was largely due to significant savings from being able to maximize the capacity of logistics assets and engaging in leaner production, eliminating inventory costs.
It targets revenues of VND33 trillion ($1.43 billion) this year and post-tax profits of VND1.5 trillion, 20 percent and 30 percent higher than in 2020, Vu said.
At the annual general meeting, Vu also said that Hoa Sen will shift its focus away from steel production towards the distribution of building materials and interior decoration items via a supermarket system.
He also announced that he would leave the company to become a monk in 2026, selling all holdings in Hoa Sen to "those committed to developing the company." In the meantime, he would work closely with the company, train its executives and eventually identify a successor.
