What does Kyoei hope to gain from loss-marking Vietnam Italy Steel?
What does Kyoei hope to gain from loss-marking Vietnam Italy Steel?
Kyoei Steel is working hard to buy Vietnam Italy Steel (VIS) shares while VIS is operating at a loss, raising the question - what does the Japanese steel producer expect to gain from a loss-making firm?
Most recently, Kyoei registered to purchase an additional two million shares of VIS. The transactions are expected to be carried out between July 19 and August 16, 2018.
Once successful, Kyoei will increase its ownership in VIS to 70.42 per cent from the existing 67.7 per cent.
In early July, Kyoei completed the purchase of another two million VIS shares via the put-through method to increase its stake in VIS to the current 67.7 per cent.
Kyoei became the strategic partner of VIS in late 2017 after buying more than 14.7 million shares, or 20 per cent ownership, from previous shareholder of VIS – Thai Hung Company.
In May 2018, the Japanese firm purchased another 33.2 million VIS shares from Thai Hung Company and replaced the latter as the strategic investor of VIS with 65 per cent ownership.
Continuing to purchase more VIS shares shows its ambition to acquire VIS, contributing to growing dominance in Vietnam’s steel manufacturing sector.
However, according to the business statement published by VIS, the firm reported a loss of VND68 billion ($2.94 million) in the second quarter alone.
Besides, VIS reported a decrease of 8 per cent in net revenue to VND1.37 trillion ($59.4 million) and suffered gross loss from the sales sector of VND16.7 billion ($724,455).
According to VIS, the bleak business result can be attributed to the demand for steel from the local market decreasing, causing a decrease in selling price, meanwhile the expenditure for the material sees continuous increase.
In addition, the firm reported a doubling in expenditure for sale to VND5.3 billion ($229,916), and an increase of managing expenditure to VND29.6 billion ($1.28 million). As a result, VIS suffered net loss of VND66.1 billion ($2.86 million) in first six months of this year.
In the second quarter alone, the loss reached VND68 billion ($2.94 million), the largest loss that VIS has experienced in a quarter since the firm listed its shares on the stock exchange.
