Hoa Binh Construction Group Corporation (HBC), chaired by Mr. Le Viet Hai, has just sent a reply to the Ho Chi Minh City Stock Exchange (HOSE) regarding the mandatory delisting of HBC shares.

Accordingly, Hoa Binh Construction affirms that it does not agree with the grounds applied by HOSE to consider mandatory delisting of HBC shares.

Hoa Binh Construction's move took place in the context of HBC shares being sold off, falling to the floor for 3 sessions and the company suddenly announced that it plans to transfer HBC code to the Upcom trading floor, under the Hanoi Stock Exchange (HNX).

HBC said on July 27 that the transfer of nearly 347.2 million shares to Upcom is expected to be completed in August 2024. On Upcom, the price fluctuation range is 15%/session, instead of 7% on HOSE.

HBC leaders also said that being delisted does not affect HBC's stock price.

Le Viet Hai
Mr. Le Viet Hai, Chairman of HBC. Photo: HBG

Hoa Binh Group affirms that it does not agree with the grounds applied by HOSE to consider mandatory delisting of HBC shares for the following reasons:

Firstly , Decree 155 on mandatory delisting of the Government does not provide details on considering the condition of accumulated losses on the consolidated audited financial statements or on the separate audited financial statements.

According to HBC, there is currently no legal document from any competent authority guiding the application or interpretation of the law in this case. For Hoa Binh Group, the company's charter capital is more than VND 2,741 billion, while the accumulated loss in the 2023 separate audited financial report is negative VND 2,401 billion and in the 2023 consolidated audited financial report is negative VND 3,240 billion.

Thus, according to HBC, the total accumulated loss of this enterprise on its separate audited financial statements has not exceeded the company's charter capital, so it is not subject to delisting according to regulations.

Second , HOSE's consideration of delisting HBC shares based on previous precedents (historical application) is inconsistent with current law.

Specifically, the previous regulations on listing securities at HOSE (2018) provided guidance on considering the accumulated loss conditions for listed organizations with subsidiaries based on consolidated financial statements, so similar cases in the history of Hoa Binh Group being delisted were appropriate.

However, on March 31, 2022, the Board of Members of the Vietnam Stock Exchange issued new regulations on listing and trading of securities. Therefore, HBC considers the application of the old regulations to be inappropriate.

According to HBC, the delisting of HBC shares will directly affect more than 39,000 shareholders and thousands of employees, as well as more than 1,400 suppliers and subcontractors with hundreds of thousands of employees at these businesses.

Previously, Mr. Le Viet Hai's Hoa Binh Construction had made many restructuring and transformation moves before being delisted.

In the second quarter of 2024, HBC's after-tax profit was more than VND 684 billion, while in the same period it lost VND 268 billion. In the first 6 months, HBC's accumulated profit was VND 740 billion, thereby reducing the accumulated loss by the end of June to only negative VND 2,498 billion.

Also by the end of the second quarter, HBC recorded an increase in owner's equity from VND2,741 billion at the beginning of 2024 to VND3,472 billion thanks to the issuance and listing of 73 million debt swap shares for creditors including suppliers, subcontractors, and manufacturers of the company.

Thus, by the end of the second quarter, HBC's accumulated loss was VND2,498 billion, much lower than the new charter capital (VND3,472 billion).

Based on the new figures, HBC will no longer be subject to mandatory delisting.

However, the announcement by HOSE is based on the audited financial report (2023) and the delisting is according to regulations (Decree 155 of the Government). HBC's data up to the end of the second quarter is the company's own report.

HBC’s profit breakthrough in the second quarter is also worth noting. HBC’s record profit in the second quarter was mainly due to the reversal of provisions and asset liquidation. HBC’s financial revenue in the second quarter increased 2.2 times compared to the same period last year to VND46.2 billion, including VND19 billion in profit from selling investments.

In addition, HBC will be able to recover more than VND 220 billion in management costs in the second quarter of 2024. In the same period last year, HBC recorded nearly VND 528 billion in business costs.

Mr. Le Viet Hai's Hoa Binh Construction was delisted: 'Last-minute' maneuvering According to HOSE, Mr. Le Viet Hai's Hoa Binh Construction fell into a case of forced delisting due to accumulated losses exceeding the actual charter capital. However, this enterprise has just released a second quarter report with numbers of efforts to turn things around.