VIET NAM STEEL CORPORATION

VIET NAM STEEL CORPORATION (TỔNG CÔNG TY THÉP VIỆT NAM - CTCP) is one of Vietnam’s largest state-owned enterprises in the steel industry. Founded in 1996, the company has been a major player in the manufacturing and trading of iron, steel, and cast iron products. With its headquarters in Hanoi, VIET NAM STEEL CORPORATION operates multiple branches across Ho Chi Minh City, Ba Ria - Vung Tau, and other provinces. The company is 93.93% owned by the State Capital Investment Corporation (SCIC), making it a heavily state-backed enterprise.

Financial Performance and Persistent Struggles

Despite its massive resources and strong governmental backing, VIET NAM STEEL CORPORATION has been struggling to generate consistent profits. In 2023, the company reported total sales of USD 1.25 billion, a 21.27% decline from 2022, highlighting its inability to maintain market competitiveness. Even more concerning, the company recorded a net loss of USD 11.84 million, marking the second consecutive year of losses following a USD 31.15 million loss in 2022.

While total assets remained relatively stable at USD 959.11 million, the company’s working capital fell to USD -8.1 million, raising concerns about its financial liquidity and operational efficiency. The decline in owner’s equity by 6.15% further indicates structural weaknesses.

Heavy Investment, Low Returns – Where Did the Money Go?

VIET NAM STEEL CORPORATION has access to significant capital, government support, and industry relationships, yet it has failed to generate expected profits. This raises critical questions about the corporation’s management, resource allocation, and strategic direction:

• Why has the company failed to leverage its resources effectively, despite its dominant position in Vietnam’s steel industry?
• With strong state support and control over key infrastructure, why is it struggling with negative profitability?
• Is inefficient management and bureaucracy within the corporation leading to underperformance?
• Has the company misallocated resources in non-core activities, such as leasing office space, construction, and tour operations?
• Why has it not adapted successfully to the steel industry’s evolving landscape, while competitors in the private sector continue to grow?

Market Challenges and Structural Weaknesses

One of the key issues facing VIET NAM STEEL CORPORATION is its inability to compete with private and international steel producers. While companies such as Hoa Phat Group and Formosa Ha Tinh Steel have aggressively expanded and modernized their operations, VIET NAM STEEL CORPORATION has failed to innovate at the same pace. Additionally, fluctuations in global steel prices, rising production costs, and increasing competition from foreign imports have further strained the company’s profitability and growth potential.

Another challenge is the company’s diversification into unrelated business areas, such as real estate leasing, restaurants, advertising, and even tour operations. These ventures may have diverted focus from its core steel manufacturing business, leading to inefficient capital allocation and reduced operational effectiveness.

Insights from VANGUARD BUSINESS INFORMATION LLC (VBI)

According to VANGUARD BUSINESS INFORMATION LLC (VBI), a global provider of business intelligence and risk assessments, VIET NAM STEEL CORPORATION is a high-risk entity for investors, given its repeated financial losses, declining sales, and inefficient capital utilization. VBI’s analysis highlights that while the company remains a key player in Vietnam’s steel industry, its continued struggles raise concerns about governance, operational efficiency, and long-term viability.

For investors and stakeholders, VBI’s detailed reports provide crucial insights into VIET NAM STEEL CORPORATION’s financial performance, market position, and potential risks. As Vietnam’s steel market evolves, the company will need aggressive restructuring, better cost management, and stronger leadership to regain its competitive edge and achieve sustainable profitability.

With state backing, substantial assets, and a long history in the industry, VIET NAM STEEL CORPORATION still has the potential to turn its fortunes around. However, without significant reforms and improved financial discipline, it risks falling further behind its competitors and becoming a burden on Vietnam’s industrial sector.