HPG spends $12.7 mln on shares mortgaged at ACB
HPG spends $12.7 mln on shares mortgaged at ACB
Some 20 million shares of Hoa Phat Steel Joint Stock Co (HPS) owned by recently arrested banking mogul Nguyen Duc Kien had been mortgaged at Asia Commercial Bank (ACB) before being sold to the Hoa Phat Group for VND264 billion ($12.7 million).
The Hoa Phat Group, coded HPG on the Ho Chi Minh Stock Exchange (HoSE), had spent the sum to buy the HPS shares from Hanoi ACB Investment Joint Stock Co (Hanoi ACB), said Nguyen Thi Thao Nguyen, HPG deputy general director.
HPG bought the shares in HPS, a subsidiary of HPG which has a chartered capital of VND2 trillion, from Hanoi ACB to raise their ownership in this subsidiary from 85 percent to 95 percent on May 31, 2012.
Nguyen Thanh Toai, deputy general director of ACB, has also confirmed in a statement with local media that the bank still hold HPS shares mortgaged by ACB Hanoi as collateral. But he did not confirm the name or the amount in the statement.
Previously, in a report to foreign investors last Thursday, after an overall synthesis and analysis of information, Saigon Securities Joint Stock Co (SSI) said HPG had already bought the 20 million shares which were owned by ACB as collateral.
HPG may face the risk of losing hundreds of billions of dong in the case of Nguyen Duc Kien, former Chairman of the Board of Directors of Hanoi ACB, who failed to repay the loans to ACB, said SSI.
Kien was arrested last month and has been hit with additional charges of "fraudulent appropriation of property".
The Hoa Phat Group is waiting for an official investigation from state agencies for a final conclusion about the case relating to the shares of its subsidiary owned by Hanoi ACB Investment Joint Stock Co, said Nguyen.
HPG told Fiachra Mac Cana, managing director and head of research of the Ho Chi Minh City Securities Co. (HSC), that it bought the shares in strict compliance with the laws when it had not received any official information about any possible mortgage.
“In the worst case, HPG might have to record a provision loss of VND264 billion against long-term investment, which would reduce our latest financial year 2012 net profit forecast from VND1.083 trillion (down 12 percent year on year) to VND873 billion (down 29.4 percent y-o-y),” said Cana.
“EPS would then be VND2,748 (down 23.1 percent y-o-y) and valuing the stock at a 8.7x P/E, versus a 7.0x P/E if no provision is required,” he added.
“In terms of fundamentals, we believe that HPG is a good company taking the long-term beneficiaries from the industrial consolidation thanks to its cost leadership based on the integrated production system,” he said
“The HPG share price has fallen sharply today and may continue to fall further until the mystery is cleared up one way or another.”
HPG shares on HoSE lost VND1,000 (-4.59 percent)and VND,700 (-3.37 percent) on Monday and Tuesday, falling to VND20,800 and VND20,100 per share respectively.
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