Pomina Steel Sells 20% Stake to Nansei Steel Japan
Steel NewsDate: 24-07-2023 by: Ngan Le
The Pomina Steel Board of Directors recently announced the decision to sell nearly 70.2 million shares, equivalent to 20% of the Pomina stake to Nansei Steel Japan. Accordingly, the price per share is listed at 10,000 VND (0,42$) and is about 35% higher than the market price.
Overview of the dealing Pomina stake event
On July 14, the General Meeting of Pomina Steel Shareholders said that the stock issuance process would be divided into two rounds; the first round will take place in August with more than 10.6 million shares, and the remaining shares will be completed in September 2024. However, the Japanese partner will not be allowed to transfer shares for the first 3 years since the transaction started.
Nansei Steel is a steel manufacturer and exporter based in Chiba, Japan, this business has just been established in Vietnam for half a year. Answering the news conference, Mr. Inafuku Makoto said that the company has had the opportunity to cooperate with Pomina steel company since 9 years ago. The result of this cooperation is the transfer of a 20% Pomina stake with a value equivalent to 20 million USD.
Mr. Inafuku Makoto stated at the general meeting of shareholders
Currently, Pomina only has one major shareholder Vietnam Steel Production and Trading Co Ltd with an ownership rate of more than 53.3% of the capital, but after completing the offering, Nansei Steel will be the second largest shareholder in Pomina. Some news sources indicated that this money was used to renew working capital as well as to invest in the blast furnace with a capacity of 1 million tons into operation.
Transferring Pomina stake is an excellent solution to overcome financial difficulties
Pomina is deep into a difficult financial period due to the influence of the domestic steel consumption market from 2022 to the present. Last year, the company made a loss of profit after tax of nearly 1100 billion dong and another 186 billion dong in the first quarter of 2023. According to the management, cooperating and transferring shares with Nansei Steel is the best solution to help the company have enough financial resources to meet market demand in the next half year.
According to Pomina's CEO, the Vietnamese steel market in the period 2024 may prosper thanks to public investment; however, the growth percentage in consumption is only from 15 to 20% because the demand for Vietnam's steel consumption mainly comes from the real estate sector. Therefore, also at the meeting of shareholders, Pomina set a revenue target of 9,000 billion dongs this year, and the loss of after-tax was reduced to 150 billion dongs. This figure is much lower than the target set in the previous annual report because the situation of Vietnamese steel in the first half of this year is still gloomy and there are not many strong breakthroughs.
In the first half of 2023, although the Vietnam steel market has passed the most challenging period, the recovery rate is still prolonged because the demand for steel is not diversified and only focuses on the real estate sector. However, in the future, the domestic steel consumption market will have more bright spots when Vietnam is promoting investment strategies in automobile manufacturing and renewable energy industries. These two fields have strong steel consumption when most of their parts and components are made of steel to increase sustainability.