NKG General Meeting of Shareholders: Completely “Strong” Finance, Expecting to Benefit From Increasing Factory Demand

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Đại hội cổ đông thường niên tôn Nam Kim

According to Mr. Vo Hoang Vu -General Director, the manufacturing sector in Vietnam is forecasted to wait in front of new investment flows. Increasing demand for industrial factories in the medium – long term will stimulate demand for coated steel sheets. However, Mr. Vu said that it would take some time to define how clear this trend will be.

Nam Kim Steel Corporation’s Annual General Meeting (HOSE: NKG) was held in the morning of June 18, 2020. The meeting was attended by 94 shareholders, representing nearly 75.45% of the shares who are having voting rights in our group. This year is also the first time which the most important meeting of NKG shareholders has been held in Ho Chi Minh City after long time.

At the meeting, NKG General Director – Mr. Vo Hoang Vu said that the coated steel industry and the steel industry was negatively affected by the severe Covid-19 pandemic. With NAMKIM STEEL, the export market was facing difficulties when countries closed in March-May, although, there was a recovery in June, the second quarter was still greatly affected in general.

Unfavourable fluctuations in steel prices, excessed global supply was the concerns that NKG and other companies in the same industry had to face. Mr. Vu said that the steel supply excess previously known in China but now it continues to happen in India.

The domestic coated steel sheet market is also under increasing competitive pressure. The targeted consumption of 700 thousand tons in 2020 is “very challenging”, Mr. Vu shared. This year, NKG sets a target of 12 trillion VND in revenue, 200 billion VND in profit after tax and a maximum dividend of 10 percent (in cash or stock).

Mr. Vu said that NKG will focus on improving internal capacity to acheive planned targets. In particular, it will focus on advertising and marketing activities and the presence of Ton Nam Kim at retailers and distributors. The company also aim to high-end products with greater margins.

Notably, Mr. Vu revealed that NKG is rushing to complete the final steps to bring into the management system of SAP ERP system since the beginning of July. This step is set up in between of period when this company focuses on improving inventory management on forecasting and monitoring the costs and norm of business efficiency.

“NKG’s cash flow is completely good ”

In 1st Quarter of 2020, NKG’s financial statements showed a negative cash flow of nearly 830 billion VND. This is one of the issues that investors pay attention to ,when considering this coated steel company’s restructuring process from 2019 so far.

According to Mr. Vu, NKG had abundant positive cash flow in 2019. Accordingly, the Company has used a lot to repay the loans and still has a large balance at the end of the year (bringing investment in short-term bonds). In the first quarter of early 2020, NKG used the excess money to pay suppliers over 700 billion VND and negotiated with them to receive a discount on early repayment.

In addition, NKG promotes sales by increasing debit balance to buyers. The company also increased a portion of inventories during the period of low hot rolled steel prices.

Mr. Vu said NKG has not discussed with banks so far to ask for more time or delay repayment.

“The company always tries to affirm how good of its business be. Our cash flow is still fine. We are not concerned about the debt structure issue but are focusing on increasing sales volume”- Mr. Ho Minh Quang- Chairman shared.

Access in the Central region market

NKG has so far completed the investment license for Chu Lai steel pipe factory and has received the land. The company is finalizing the construction license to be deployed in August and plans to be finished by the end of 2020.

Chu Lai Steel Pipe Factory has a total investment of 150 billion VND, “this is NKG’s solution to access the central market. If distributing corrugated iron, NKG needs to have a warehouse in the middle area, along with that, we also combine with steel pipe production to increase consumption output. The factory’s corrugated iron warehouse is only about 200 meters far away from Chu Lai port, Mr. Vu added.

NKG will transport raw materials for Chu Lai pipe factory from the manufacturing facility in the South. According to Mr. Vu, the cost of this transportation , in this case, is not high.

Mr. Quang said that the immediate Chu Lai factory only focuses on making steel pipes. However, he opens the possibility of developing more product lines if the market has a demand in the future.

The discussion

What will NKG be when Hoa Phat Group (HOSE: HPG) enters the coated steel market?

Mr. Quang- Chairman: Automatically, with the participation of HPG, the market will be even more competitive. However, NKG has a brand name and affirmed products. We are confident that we will not encounter too many obstacles in the future.

Mr. Vu- General Director: As an enterprise in the industry, NKG has always determined to focus on improving better internal resources to compete.

Would NKG leaders share more about the cooperation with SMC Investment and Trade (HOSE: SMC)?

Mr. Vu: NKG and SMC leaders have a personal-known relationship. SMC is also the consumer of NKG’s products, but also a normal customer like many other businesses.

SMC is a listed company, and its investment activities are public. Personally, I would like to affirm to shareholders that I participate in NKG capital from a personal perspective, not related to SMC.

How does NKG management forecast hot rolled coil prices to happen in 2020?

Mr. Vu: Hot rolled coil price dropped significantly in the first quarter of 2020 from 500 USD per ton to 400 USD. This fluctuation greatly affects the forecast of raw material inventory of NKG.
Hot-rolled coil price so far has recovered to above 440 USD / ton and it is very difficult to make a prediction. The global steel industry, especially the hot-rolled steel segment is still in excess supply. To prevent uncertainties can happen, we take great care to ensure inventory levels and ensure liquidity for goods rotation.

When will the company pay dividends to shareholders?

In 2019, we encountered difficulties and had to re-structure, so we did not pay dividends. For 2020, the dividend is expected to be divided 10% to shareholders. We are also internal shareholders and still would like to have cash dividends. However, depending on NKG’s activities, we will come up with a suitable plan.

vietstock source– Link : https://vietstock.vn/2020/06/dhdcd-nkg-hoan-toan-8216khoe8217-ve-tai-chinh-ky-vong-huong-loi-tu-nhu-cau-nha-xuong-tang-737-768805.htm

Nam Kim Steel Joint Stock Company
Lot A1, Đ2 Street, Dong An 2 Industrial Park, Thu Dau Mot City, Binh Duong
T. (+84)274 3748 848 | F. (+84)274 3748 868
Email: info@namkimgroup.vn

Representative office
Room 802, 8th Floor, Ha Do Airport, 02 Hong Ha, Ward 02, Tan Binh District, Ho Chi Minh City
T. (+84)283 6204 829
Email: info@namkimgroup.vn