During the annual meeting on the morning of March 7, Mr. Le Phuoc Vu, Chairman of Hoa Sen Group's Board of Directors, dedicated 30 minutes to address shareholders regarding the company's ability to maintain its leading position in the steel sheet industry and its ambitions in construction material distribution.

Mr. Vu affirmed that steel sheet remains a short-term pillar for Hoa Sen. The company has divested production lines installed two decades ago, replacing them with newer manufacturing technology. This upgrade has stabilized production capacity at approximately 1.8-2 million tons annually. Of this, about 1.1 million tons are for domestic consumption, with the remainder exported. Steel sheet revenue is estimated to fluctuate between 30,000-40,000 billion VND per year, yielding a profit of 1,000 billion VND, depending on raw material prices.

"Our output is two to three times that of the next largest competitor, allowing us to lead the market for several more years. However, the growth potential in this sector has reached its limit," Mr. Vu stated.

The head of Hoa Sen noted that adding more production lines to factories in TP HCM, Gia Lai, and Nghe An could increase total capacity to 2.5-3 million tons annually. However, he cautioned that further investment in steel sheet production "is not a wise decision" due to trends in trade protectionism, global oversupply, and narrow profit margins.

Mr. Le Phuoc Vu at the annual meeting on the morning of March 7. *Photo by Phuong Dong*

This market reality is not new, according to Mr. Vu. The company anticipated difficulties in the steel sheet industry and recognized the risk of falling behind, or even being eliminated, without timely change. Consequently, Hoa Sen expanded into construction material and interior distribution in 2020, officially establishing a subsidiary, Hoa Sen Home, earlier this year after extensive trials and business model refinements.

The Hoa Sen Home chain, which distributes construction materials and interiors, currently operates more than 143 stores. Last year's revenue reached 16,000 billion VND, with profits exceeding projections. This year, the chain plans to open approximately 20 new stores and establish multiple large warehouses nationwide. The product range offered by this chain is sufficient to meet 90% of the requirements for completing a house. Revenue for Hoa Sen Home is projected to reach several billion USD in the coming years, with profit margins significantly higher than those from the steel sheet business.

Mr. Vu explained that his experience indicates two critical factors for success: doing something different and being ahead of others. He believes Hoa Sen Home fulfills both criteria, making rapid expansion the current priority.

"For the past several years, I carried a significant burden of responsibility towards shareholders. Now, I am at ease, having found a new direction, and I can confirm this is the future of the group," Mr. Vu repeatedly emphasized this message during the March 7 meeting.

Hoa Sen Home currently has a charter capital of 1,000 billion VND, with Hoa Sen owning nearly all of it. The company plans to increase its capital to 3,300 billion VND this year through an offering to existing shareholders and a preferential issuance to employees. Following this, Hoa Sen Home anticipates an initial public offering (IPO) and listing on the stock exchange.

In the near future, Hoa Sen Home will transition from a subsidiary of Hoa Sen. The entity will separate, Hoa Sen will gradually reduce its ownership, and assume the role of a financial investor. Existing Hoa Sen shareholders are encouraged to acquire shares, becoming new shareholders of what is positioned as the country's first domestic construction material distribution chain.

Hoa Sen has set its business targets for this year under two scenarios. In a cautious scenario, the company projects net revenue and after-tax profit to reach 35,000 billion VND and 500 billion VND, respectively.

Management indicated that increased interest rates on working capital loans, potentially doubling financial costs compared to the previous fiscal year, are the primary reason for adopting a cautious business plan. Should market conditions improve and interest rates decrease in the latter half of the fiscal year, the company anticipates revenue could reach 37,000 billion VND and profit 600 billion VND.

Phuong Dong