On the eve of the 2021 General Meeting of Shareholders, Mr. Nguyen Hoang Hai, Acting Chief Financial Officer (Acting CFO) of Halcom Vietnam JSC. shared with CafeF about the business plan for 2021 and the coming years.
Book value of the company is 1.3 times, equivalent to 13,000 VND/share. This is the basis for many investors to agree that HID is undervalued, with price of recent sessions of only about 6,500-7,000 VND/share. Long-term value investors will not pass up this great opportunity to add HID to their long-term portfolio.
What do you think about the 2021 business plan of Halcom?
In 2021, the company plans to earns 340B dong of revenue, 21.6B dong of profit after-tax. From business perspective, this is a cautious plan. If you take a look at the Financial Statement in 2019, all profits deducted by the auditor in the Consolidated Report could make relevant regulatory authorities and shareholders misunderstand. If we add that amount, the final result looks more optimistic.
Regarding Phuong Mai 3 Wind Power Project in Binh Dinh, the company has been operating stably. Wind power output in 2021 might reach 60,000-70,000 Mwh. At the tariff of 8.5 cent/Kwh, the revenue could be 120-140B dong/annum. The company has a cost mitigation plan which is based on personnel savings as well as other recurring costs.
Investment is the core business activity of Halcom. In recent years, the company has been focusing on Hong Duc wind power project (Quang Binh) with the capacity of 200MW and total investment of 10,000B dong; Hau Giang 2 solar power project 40MW, Long An waste to energy project, Ha Noi waste to energy project. Various partners are ready to participate in the projects, which means the company will collect tens of billions of dong from share transfer.
Phuong Mai 3 Resort project with about 20ha of commercial land over a total area of 122ha at a beautiful location near to big projects such as FLC Nhon Hoi, Ky Co Gateway has attractive prices.
Nhon Hoi water project expected to be construction commence in July 2021 is in the final phase of land clearance. This project will supply water for the whole Nhon Hoi economic zone and regional habitants. There are a lot of partners wishing to participate in this project.
The revenue from consulting will breakthrough. In 2021, the company has don consulting service on safeguard policy, resettlement and construction supervision for national projects on reservoir safety, urban upgrading, green urban development, etc. in Ninh Binh, Hue, Quang Nam, Binh Dinh, An Giang and many other projects . The separated revenue plan for consulting in 2021 is 50B. The peculiarity of the consulting segment of ODA projects is that the cost of capital is low, the profit margin on total revenue is higher than that of domestic consulting bidding packages.
With the divestment of some investment projects for domestic and foreign partners, we are optimistic that the profit in 2021 can reach 60 billion dong. The approved after-tax profit plan which is 21B shows the cautious view of the Board of Directors and mainly takes into account the profit from core business activities, not the profits from financial activities through the transfer of shares in investment projects.
Does Halcom have any action to mitigate operation cost?
Regarding Phuong Mai 3 wind power project, interest expense is on the decrease thanks to the reduced principal payment. The fluctuating exchange rate between EUR and USD is in favor of the Borrower. Therefore, it is expected that the profit from this project can reach up to 10-15 billion. Similarly, at Hau Giang 1 Solar Power Plant, we succeeded in deferring L/C payment for GE supplier, thus drastically reducing the expected interest from MBBank to pay for GE equipment purchases.
Management cost of Halcom company can also be mitigated due to Board of Management salary budget reduction after the foreigner CEO dismissed. We’re planning for a replacement with a Vietnamese candidate for this position who’s able to execute project investment and M&A strategy of the company.
How do you evaluate the stock price movement of Halcom in recent years?
HID has had several consecutive sessions reaching the ceiling price, which surprised the market. We think this is quite normal. In the past, the market reacted negatively so the price of HID went down too far from its true value. One of the reasons is that in the 2019 consolidated financial statement, Halcom suffered a loss because of a 30B profit from financial activities was deducted from audit and not considered a profit from business activities. Therefore, HID share was controlled, making investors worried. This is actually a “real gain” but must have been reported as a “loss”. We will carefully study Vietnam’s regulations and give specific explanations to shareholders in the upcoming report periods to avoid this kind of misunderstanding again. The financial management of the Company will have to be strengthened and keep pace with the development and the regulations of Vietnam.
2020 profit after tax was positive thanks to the revenue from actualized investment project and the return on investment, which brought HID out of controlled situation. The company was praised by HOSE for actively participating in providing information to securities regulators and promptly providing information to shareholders. The recent stock price movements reflect shareholders’ optimism about the company’s future development and ability to actualize its 2021 profit plan.
Book value of the company is 1.3 times, equivalent to 13,000 VND/share. This is the basis for many investors to agree that HID is undervalued, with price of recent sessions of only about 6,500-7,000 VND/share. Long-term value investors will not pass up this great opportunity to add HID to their long-term portfolio. Many investors even indicate that we shouldn’t issue shares to strategic shareholders at the price of 10,000d/share
It’s necessary to say that 10,000d/share is just an expected price. We will negotiate the best price for current shareholders based on the market status, which could be roughly 13,000-15,000d/share.