Struggles in the Export Market

Export revenue accounts for more than 60% of NKG’s total revenue, with the remaining portion coming from the domestic market.

According to its Q4/2024 financial report, NKG recorded revenue of VND 4,469 billion, a slight increase of 0.74% compared to the same period last year. However, its net profit in Q4/2024 was only VND 18.4 billion, down 18% year-over-year.

Despite the gloomy final quarter, NKG had a relatively positive performance throughout 2024. The company's total revenue for the year reached VND 20,609 billion, up 11% compared to the previous year. Notably, net profit surged to VND 453 billion, marking a 286% increase from 2023. With this result, NKG exceeded its 2024 pre-tax profit target by 33%.

However, by the end of 2024, the company’s inventory had risen to nearly VND 6,700 billion, significantly higher than the VND 5,700 billion recorded at the beginning of the last year. The sharp increase in inventory was primarily due to challenges in the steel export market, as import countries have implemented trade protection measures. Since June 2024, key export markets for Vietnamese steel, such as the EU, the U.S., and Malaysia, have initiated anti-dumping investigations against Vietnamese steel.

Intense Domestic Competition

While the export market remains challenging, the domestic steel market is also facing multiple difficulties. NKG, in particular, is under intense competition from low-cost imported steel from China.

According to the General Department of Customs, steel imports in the first two months of this year surged by 90%, making it harder for domestic firms to sell off their existing stock. Additionally, the high volume of maturing bonds from local real estate companies—estimated at over VND 200,000 billion between the second half of 2024 and 2025—will put pressure on cash flows, affecting project progress and limiting domestic steel consumption.

Given these circumstances, many experts predict that NKG’s business performance may stagnate in the upcoming quarters. The key reason is the ongoing difficulties in export markets, while domestic demand remains weak, making it difficult to clear steel inventories.

Challenges in Raising Capital

As discussed, the challenging business environment has tightened NKG’s cash flow. Specifically, net cash flow from operating activities was negative by more than VND 540 billion by the end of Q4/2024.

In response, NKG offered 131.6 million shares to existing shareholders at a price of VND 12,000 per share, aiming to raise VND 1,580 billion to fund the Nam Kim Phu My Roofing Sheet Steel Plant project in Ba Ria - Vung Tau. This is a strategic project for NKG, with a total investment of VND 4,500 billion (Phase 1). According to Chairman Ho Minh Quang, the plant has received its construction permit and is expected to commence operations in Q4/2025. Once operational, NKG’s total production capacity will increase from 1 million tons per year to 1.6 million tons per year.

However, NKG was only able to sell 79% of the issued shares. The company plans to distribute the remaining 21% to a group of investors. The Board of Directors has approved a list of 22 investors who will be allowed to purchase these shares at a price not lower than the initial offer price to existing shareholders (VND 12,000 per share).

Given the ongoing business challenges, securing sufficient capital for its projects remains a significant hurdle for NKG.