The Hanoi Stock Exchange (HNX) recently suspended trading of Hanoimilk’s HNM stock after the company delayed the release of its audited financial reports for 2018 and H1 this year. This has added to the challenges the company already faces.

As of the end of the third quarter this year it had accumulated losses of over VND23 billion ($989,000). In Q3, its pre-tax profit was only VND1 billion ($43,000) on revenues of VND120 billion ($5.2 million).

Established in 2001 with a capacity of 40 million liters a year, Hanoimilk used to be a major player, accounting for 28 percent of the children’s pasteurized fresh milk market.

With its milk and yoghurt brand IZZY for children aged 3-12, the company reported revenues of almost VND340 billion ($14.6 million) in 2007 and after-tax profit of VND12 billion ($516,000).

It then targeted expansion into milk powder, condensed milk and juices, hoping to become one of the top three dairy firms in the country.

But in 2008 Hanoimilk products were suspected to be tainted with melamine, a chemical compound used to make plastic and illegally added to food to inflate the apparent protein content.

The health ministry in December 2008 cleared Hanoimilk within two months, saying its products were safe, but by then consumers had already boycotted the brand.

Revenues have been in free fall since.

Despite its attempts to reduce costs, the company only makes profits of a few billion dong (VND1 billion = $43,000) a year, a fraction of that of top firms Vinamilk, Dutch Lady and TH.

Speaking to shareholders at this year’s half-yearly meeting, Hanoimilk board members said the release of the financial reports was delayed because the company had been unable to agree with auditors about provisioning for bad debts.

Shareholders suggested the company should acquire smaller dairy companies, but the company rejected the idea due to lack of resources.

Instead, the board hoped for investment from a larger company to mitigate the situation.

But Hanoimilk seems to be missing out as the country’s expanding middle class increasingly spends on dairy consumption.

Vietnam’s dairy revenues rose by 9 percent last year from 2017 to VND109 trillion ($4.69 billion), according to the Vietnam Dairy Association.