TONG HONG TANNERY (VIET NAM) JOINT STOCK COMPANY

As a credit manager reviewing the financial health and risk profile of TONG HONG TANNERY (VIET NAM) JOINT STOCK COMPANY, here is my professional assessment based on its official report and recent performance data

Creditworthiness Evaluation

Business Overview:
Established on July 10, 2003, and headquartered in My Xuan A2 Industrial Park, Ba Ria – Vung Tau Province, TONG HONG is a foreign direct investment (FDI) enterprise specializing in the tanning and dressing of leather and fur. It operates under Business ID 3500613955 and has over 1,300 employees, making it a substantial regional employer.

The company is majority-owned (98%) by Redway International Enterprise Company Limited, based in the British Virgin Islands. It is led by a Taiwanese management team that includes Chairman Shih, Yung Chang, and General Director Lee Wei Kai.

Financial Performance (FYE 2023)

• Revenue: USD 120.62 million (▲16.54% YoY)

• Profit: USD 9.84 million (▲68.56% YoY)

• Total Assets: USD 92.41 million (▼9.78%)

• Owner’s Equity: USD 59.58 million (▲19.79%)

• Working Capital: USD 47.05 million

• Net Worth: USD 58.32 million

Credit Risk Observations

1. Strong Top-Line and Bottom-Line Performance
TONG HONG posted excellent year-over-year growth in revenue and profit, with profit rebounding by nearly 70% in 2023 after dipping in 2022. This recovery suggests improved operating efficiency, cost control, or favorable market pricing in the leather industry.

2. Robust Capital Structure
The company displays a solid solvency position with an equity base of nearly USD 60 million and working capital exceeding USD 47 million. This capital strength allows for healthy operational continuity and risk absorption capacity.

3. Decline in Asset Base
Despite strong profitability, total assets fell by 9.78%, potentially due to asset write-downs, depreciation, or tighter asset utilization. While not immediately alarming, the downward trend warrants monitoring in future years.

4. FDI and Foreign Ownership Risks
As a 98% foreign-owned firm, the parent company’s financial health, currency transfer policies, and offshore tax structures may introduce external risks, particularly for Vietnamese lenders and trade partners engaging in local transactions.

5. Operational Scale and Workforce Size
Employing over 1,300 staff, TONG HONG demonstrates sizable production capabilities. However, it also implies high fixed costs and dependency on export demand, primarily since leather processing is typically geared toward international markets.

Credit Recommendation

TONG HONG is currently a low-to-moderate risk counterparty, given its:

• Substantial revenue and profit performance

• High working capital and equity base

• Large-scale operations and global backing

That said, for any credit-based transactions, I recommend the following terms:

• Moderate credit exposure limits aligned with historical payment performance

• Shorter payment cycles (30–45 days) to mitigate sector volatility

• Periodic financial reviews and monitoring of offshore parent company risks

• Legal due diligence to confirm transfer pricing, licensing, and tax compliance

TONG HONG TANNERY presents a reliable profile, with sufficient liquidity and growth, making it a creditworthy client for trade finance, raw material procurement, or vendor partnerships—subject to ongoing review of its capital movements and export market dependency.