Brian Jeffrey
The Trung Nam Solar Power JSC, as per the Hanoi Stock Exchange (HNX), recently marked a financial upturn in 2023, with profits climbing by 11% to over 278 billion VND (around $11 million).
Other financial metrics also displayed improvements. The debt-to-equity ratio decreased from 2.17 to 2.15 times. The bond debt ratio also notably dropped from 1.81 to 1.45 times. Return on equity rose from 19.87% in 2022 to 21.53%, and equity slightly increased.
These positive developments for Trung Nam Solar Power JSC emerged shortly after its parent company, Trung Nam Group, announced the sale of its controlling stake in the largest solar project to a known partner.
Previously, Trung Nam Solar Power JSC, a part of Trung Nam Group, was the backer of the Trung Nam Solar Power Plant. The project has a 204 MW capacity, a maximum electricity output of about 450 million kWh/year, utilizing over 700,000 solar panels. The total investment in this project was nearly 5 trillion VND, making it one of Trung Nam’s substantial solar ventures.
Trung Nam Group had been grappling with cash flow issues in recent times, with various companies in its network delaying bond settlements and experiencing profit declines.
Possibly due to these cash flow challenges, Trung Nam Group had to divest its controlling stake in the solar project, which was anticipated to be lucrative.
In early July, Trung Nam Group declared 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, the newly appointed 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 totaling 1.9 trillion VND (maturing from 2026-2028).
In June, Trung Nam Solar Power JSC disclosed a change in its legal representative. Nguyen Thanh Binh took over from Nguyen Dang Khoa and Nguyen Tam Thinh (Chairman of Trung Nam Group) in this role and also assumed the position of Chairman of Trung Nam Solar Power JSC.
There seems to have been a shift in ownership and management 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 held a 49% stake in Trung Nam Solar Power Plant.
Therefore, with ACIT acquiring additional shares, it appears that Trung Nam Group has relinquished control of Trung Nam Solar Power.
ACIT specializes in manufacturing medium and low-voltage electrical cabinets and executing electrical projects. The company has been involved in numerous renewable energy projects of Trung Nam Group.
Earlier, on July 12, Trung Nam Solar Power JSC faced penalties for not divulging information regarding bond interest and principal payments, financial statements, and capital utilization for several years.
Over the last two years, Trung Nam Group had repeatedly sought extensions and delays in bond payments related to renewable energy projects, with the business outcomes deteriorating.
In May, Trung Nam Group Chairman Nguyen Tam Thinh faced a travel ban recommendation due to unpaid taxes. However, the Kahn Hoa Provincial Customs Department later revoked the travel ban on Thinh by informing the Immigration Department of the Ministry of Public Security.
Established in 2004, Trung Nam Group focuses on energy, infrastructure – construction, real estate, and electronic information industries. The company initially concentrated on infrastructure construction, then branched into real estate and hydropower, and most recently ventured into renewable energy with various solar and wind power initiatives. Key projects include Trung Nam Thuan Nam Solar Power (Binh Thuan, Ninh Thuan), Ea Nam Wind Power, and Trung Nam – Tra Vinh Wind Power.
As per 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 domain.
However, over the past couple of years, Trung Nam Group and its subsidiaries confronted several challenges.
A Trung Nam Group member, Trung Nam Thuan Nam Solar Power Co., Ltd., urgently appealed to the Government due to risks of incidents and disruptions in the 500kV Thuan Nam transmission system’s operation. The company had not yet negotiated with EVN to boost revenue from power generation while having to meet bank interest payments.
In 2022, Trung Nam Thuan Nam Solar Power Co., Ltd. reported an 80% decline in post-tax profit to 81 billion VND compared to the previous year.
By the end of November 2023, Trung Nam Construction Investment JSC (Trung Nam Group) disclosed a delay in paying nearly 107 billion VND in interest due on a 2 trillion VND bond.
By the end of 2022, Trung Nam Group possessed equity of over 27.9 trillion VND, with total liabilities exceeding 68.1 trillion VND (nearly 2.8 billion USD), and total bond debt around 24.27 trillion VND.
In 2022, Trung Nam Group’s profits plunged to 255 billion VND, from 1.635 trillion VND in 2021.
Other Trung Nam Group subsidiaries also encountered difficulties. Trung Nam Dak Lak 1 Wind Power JSC (investor of the Ea Nam Wind Power Plant project over 600 hectares) incurred a loss of 390 billion VND in the first half of 2023, following an 858 billion VND loss in 2022. The company also faced delays in bond interest payments. Trung Nam Solar Power, Trung Nam Tra Vinh Solar Power, and Trung Nam Ninh Thuan all reported profit declines compared to the prior year.
USD1 = VND25,000
