Profitability returns

According to the Hanoi Stock Exchange (HNX), Trung Nam Solar Power JSC recently reported a financial turnaround in 2023, with profits rising by 11% to over 278 billion VND (nearly $11 million).

Other financial indicators also improved. The debt-to-equity ratio decreased from 2.17 to 2.15 times. The bond debt ratio also significantly fell from 1.81 to 1.45 times. Return on equity increased from 19.87% in 2022 to 21.53%, and equity slightly increased.

These positive changes for Trung Nam Solar Power JSC occurred shortly after Trung Nam Group, a major player in the energy sector, announced the sale of its controlling stake in its largest solar project to a familiar partner.

Previously, Trung Nam Solar Power JSC, a member of Trung Nam Group, was the investor in the Trung Nam Solar Power Plant. The project has a capacity of 204 MW, a maximum electricity output of approximately 450 million kWh/year, using over 700,000 solar panels. The total investment for this project was nearly 5 trillion VND and is one of Trung Nam's largest solar projects.

Trung Nam Group has faced cash flow difficulties in recent years, with many companies within its ecosystem delaying bond payments and seeing declining profits.

Likely due to these cash flow challenges, Trung Nam Group recently had to sell its controlling stake in the solar project, which was expected to be a "golden egg."

In early July, Trung Nam Group announced the transfer of its controlling interest in Trung Nam Solar Power JSC, selling 19.9 million shares in the company.

Trung Nam Renewable Energy JSC (a subsidiary of Trung Nam Group) transferred all 19.9 million shares of Trung Nam Solar Power JSC to Asia Renewable Energy Development and Investment Co., Ltd. (receiving 18 million shares) and Nguyen Thanh Binh, who recently became Chairman of Trung Nam Solar Power JSC (receiving 1.9 million shares).

Asia Renewable Energy and Nguyen Thanh Binh will act as guarantors for 12 bond packages worth 1.9 trillion VND (maturing from 2026-2028).

In June, Trung Nam Solar Power JSC announced a change in its legal representative. Nguyen Thanh Binh (born in 1981) replaced Nguyen Dang Khoa and Nguyen Tam Thinh (Chairman of Trung Nam Group) in this position and Binh also became Chairman of Trung Nam Solar Power JSC.

What remains for Trung Nam Group?

It appears there has been a change in ownership and leadership at Trung Nam Solar Power JSC.

Asia Renewable Energy Development and Investment Co., Ltd. is a subsidiary of Asia Industrial Technology JSC (ACIT). ACIT previously owned 49% of Trung Nam Solar Power Plant.

Therefore, with ACIT acquiring additional shares, it is likely that Trung Nam Group has lost control of Trung Nam Solar Power.

ACIT specializes in the production of medium and low-voltage electrical cabinets and the construction of electrical projects. This company has worked on many of Trung Nam Group's renewable energy projects.

Earlier, on July 12, Trung Nam Solar Power JSC was fined for failing to disclose information about bond interest and principal payments, financial statements, and the use of capital for several years.

Over the past two years, Trung Nam Group has repeatedly requested extensions and delays in bond payments related to renewable energy projects. The group's business results have declined.

In May, Trung Nam Group Chairman Nguyen Tam Thinh was recommended for a travel ban due to unpaid taxes. However, the Khanh Hoa Provincial Customs Department later sent a document to the Immigration Department of the Ministry of Public Security to cancel the travel ban on Thinh.

Founded in 2004, Trung Nam Group focuses on energy, infrastructure - construction, real estate, and electronic information industries. The company started with infrastructure construction, then invested in real estate and hydropower, and recently in renewable energy, with numerous solar and wind power projects. Some major projects include Trung Nam Thuan Nam Solar Power (Binh Thuan, Ninh Thuan), Ea Nam Wind Power, and Trung Nam - Tra Vinh Wind Power.

According to Trung Nam Group's website, by October 2021, the group had contributed 1.63 GW of energy to the national grid, leading the private sector in this industry.

However, over the past two years, Trung Nam Group and its subsidiaries have faced many difficulties.

A member of Trung Nam Group, Trung Nam Thuan Nam Solar Power Co., Ltd., once sent an urgent request for help to the Government due to the risk of incidents and disruptions in the operation of the 500kV Thuan Nam transmission system. The company had not yet negotiated with EVN to increase revenue from power generation while having to pay bank interest.

In 2022, Trung Nam Thuan Nam Solar Power Co., Ltd. reported a post-tax profit drop of 80% to 81 billion VND compared to the previous year.

At the end of November 2023, Trung Nam Construction Investment JSC (Trung Nam Group) announced a delay in paying nearly 107 billion VND in interest due on a 2 trillion VND bond.

As of the end of 2022, Trung Nam Group had equity of over 27.9 trillion VND. Total liabilities amounted to over 68.1 trillion VND (nearly 2.8 billion USD), with total bond debt around 24.27 trillion VND.

In 2022, Trung Nam Group's profits sharply declined to just 255 billion VND, compared to 1.635 trillion VND in 2021.

Other subsidiaries of Trung Nam Group also faced difficulties. Trung Nam Dak Lak 1 Wind Power JSC (the investor of the Ea Nam Wind Power Plant project covering 600 hectares) reported a loss of 390 billion VND in the first half of 2023, after losing 858 billion VND in 2022. This company also faced delays in paying bond interest. Trung Nam Solar Power, Trung Nam Tra Vinh Solar Power, and Trung Nam Ninh Thuan all reported declines in profits compared to the previous year.

US$1 = VND25,000

Manh Ha