HUALIDA VIETNAM (HAI HA) GARMENTS LIMITED COMPANY

HUALIDA VIETNAM (HAI HA) GARMENTS LIMITED COMPANY (CÔNG TY TNHH MAY MẶC HOA LỢI ĐẠT (HẢI HÀ) VIỆT NAM) is a foreign direct investment enterprise operating under Business ID 5702077700, registered on March 9, 2021, with its head office located at Hai Ha Industrial Park, Quang Ha Commune, Quang Ninh Province, Vietnam. The one-member limited liability company is wholly owned by Hualida (Quang Ninh) Vietnam Share Controlling Company Limited, which is based in Hong Kong.

The firm specializes in the manufacture of wearing apparel (mainly men’s jackets) and engages in the wholesale of textiles, clothing, and footwear, primarily for export markets. It currently employs around 2,500 workers and operates under the leadership of Mr. Zhang R. (General Director) and Ms. Zhao J. (Managing Director), both Chinese nationals.

Financial Overview and Performance Analysis
The company recorded rapid asset expansion but a clear downward trend in profitability in 2023.

• Total Assets: USD 67.21 million, up 59.64% year-on-year

• Owner’s Equity: USD 29.83 million, up 82.94%

• Sales: USD 104.56 million, up 7.28%

• Net Profit: USD 13.5 million, down 17.65%

• Working Capital: USD 22.65 million, up 194.32%

While these results show solid growth in capital and liquidity, the decline in profitability after an extreme 2022 performance signals efficiency challenges and possible cost pressures in production or export pricing. The company’s profit margin has narrowed, suggesting rising input costs or declining contract prices amid global garment market volatility.

The equity base remains relatively small compared to total assets, which could suggest moderate leverage risk if debt-financed expansion continues. Furthermore, since the company’s charter capital is only USD 1.53 million, yet total assets exceed USD 67 million, most growth appears funded by retained earnings or short-term liabilities — a point requiring careful monitoring for credit exposure.

Management and Ownership Risk
HUALIDA’s governance and capital decisions are likely centralized offshore as a wholly foreign-owned subsidiary under a Hong Kong parent. While this provides financial backing and supply chain access, it also introduces cross-border risk, especially regarding transfer pricing, profit repatriation, and financial transparency.

The management team is entirely foreign, which may limit operational autonomy in Vietnam and create dependence on group-level decisions. The lack of Vietnamese shareholder involvement may also affect local responsiveness, particularly in compliance and relationship management with suppliers and regulators.

Operational and Sectoral Risk
The garment industry in Vietnam is highly competitive, with intense cost pressure from global buyers. Given HUALIDA’s rapid growth, the company likely operates on thin margins and depends heavily on export contracts, particularly with U.S. and European clients. Any disruptions in global trade demand, labor costs, or logistics could directly affect earnings.

Furthermore, its large workforce of 2,500 employees indicates high fixed labor costs, which may reduce flexibility during market downturns. The company’s strong liquidity helps buffer short-term risk, but continuous margin erosion could weaken resilience if market conditions remain tight.

Credit Risk Evaluation

HUALIDA Vietnam’s financial scale and asset base suggest strong operational capacity, but several concerns warrant a cautious credit approach:

1. Profit Decline: Despite higher revenue, the 17.6% drop in profit indicates weakening efficiency and cost control.

2. High Capital-Asset Disparity: With only USD 1.5 million in capital but USD 67 million in assets, leverage exposure is considerable.

3. Foreign Ownership Dependence: Centralized management under a Hong Kong parent adds opacity to financial transparency and local credit recovery prospects.

4. Sector Volatility: The garment sector remains vulnerable to global demand fluctuations and contract renegotiations.

Conclusion and Recommendation

From a credit management standpoint, HUALIDA VIETNAM (HAI HA) GARMENTS LTD should be classified as a moderate-risk counterparty. Its asset strength and liquidity provide operational stability, but the profit contraction, ownership concentration, and exposure to external markets create potential vulnerabilities.

VNBIS recommends maintaining short-to-medium-term credit exposure only under secured conditions, with periodic financial monitoring and confirmation of parent company support. Business partners should ensure well-defined payment terms and consider trade insurance to Minimize Financial Risks while Maximizing Business Opportunities in dealings with this subject company.