FIVE STAR STEEL COMPANY LIMITED

In Vietnam’s steel trading market — a landscape often marked by short-lived companies, thin capital buffers, and volatile cash cycles — FIVE STAR STEEL COMPANY LIMITED stands out for all the wrong reasons. While the company appears energetic with fast-growing sales, its financial structure reveals deep vulnerabilities that should concern suppliers, lenders, and buyers alike.

A Small Company with Big Numbers — and Bigger Red Flags

At first glance, FIVE STAR STEEL looks impressive: revenues nearly doubled to USD 94.35 million in 2023, one of the highest growth rates in the market. But a closer look exposes a troubling foundation:

• Equity collapsed by -91.64%

• Equity is only USD 117,042 — almost negligible relative to its scale

• Profit is negative: -USD 1.28 million

• Total assets surged to USD 37.55 million, financed mainly by liabilities

This profile is characteristic of a high-risk trader — considerable revenue, minimal capital, high leverage, and persistent losses.

The Core Problem: “Big Revenue, Tiny Equity”

A steel trader with less than USD 120,000 in equity but nearly USD 100 million in sales triggers immediate risk concerns:

1. Thin Capitalization Risk

A single delayed customer payment could destabilize the entire structure.

2. High Supplier Exposure

Suppliers face an elevated risk of non-payment, as the company depends heavily on credit-based purchases.

3. Market Volatility Sensitivity

Steel trading is brutally sensitive to price swings. With weak equity, the company has limited shock absorption.

4. Negative Profit for Three Consecutive Years

Losses in 2021, 2022, and 2023 indicate a persistent business model problem, not temporary market turbulence.

Who Controls the Company?

Director Nguyen T. S. owns 60% of the company, while Nguyen T. C. G. holds 40%. With only three employees, this is a lean operation that relies on external logistics and outsourced services — typical for trading entities.

But the speed of sales growth (+88.65%) contrasts sharply with the destruction of equity (-91.64%), suggesting that growth is not translating into real wealth or sustainable profitability.

Asset Expansion or Debt Expansion?

Assets ballooned from USD 15.36 million to USD 37.55 million in just one year. Without equity to support it, this expansion likely comes from:

• supplier credit

• short-term loans

• revolving facilities

And with negative profit, these debts become increasingly challenging to service.

For Banks and Suppliers, the Warning Signs Are Clear

FIVE STAR STEEL is the type of company where the headline numbers (revenue) can be misleading. The structural numbers (equity, profit, leverage) matter far more.

High-risk indicators include:

• Extremely thin equity

• Sustained losses

• Rapid debt-driven expansion

• Enormous cash demands due to steel price fluctuations

• Minimal workforce and operational infrastructure

These factors place FIVE STAR STEEL in a high-risk commercial category, requiring strict credit control, continuous monitoring, and careful due diligence.

Should Businesses Engage with the Company?

Engagement is possible — but only with strict payment protection, clear contractual structures, and awareness of the inherent risks of steel trading dynamics.

Suppliers should avoid open terms unless backed by collateral or upfront deposits. Customers should consider the stability of supply, given the company’s fragile financial strength.

For investors or long-term partners, deeper analysis is essential.

For a complete assessment including credit behavior, debt cycles, updated 2024 performance, and risk outlook, please request the latest FIVE STAR STEEL COMPANY LIMITED report from VNBIS.COM.