Hòa Phát Group leaders receive major pay hike during steel market crisis

DNHN - Although the global steel industry is experiencing a crisis, Hòa Phát recorded a sharp increase in executive remuneration in the first half of 2024, with costs rising 3.4 times compared to the same period last year, reaching VND 112 billion.

Significant bonuses amid the steel industry crisis

Recently, the global steel industry has been going through an unprecedented difficult period, and Hòa Phát, along with domestic steel manufacturers, has also been heavily affected. However, the remuneration and bonuses for Hòa Phát's executives in the first half of 2024 increased sharply, nearly quadrupling compared to the same period last year.

Hòa Phát Group (HPG) has just released its mid-2024 financial report. The report not only highlights key business indicators but also surprises with the level of remuneration paid to the leadership. According to the report, the total amount paid to executives and key personnel in the first six months of 2024 reached VND 112 billion, up 3.4 times compared to the same period last year. Notably, almost the entire amount was allocated to remuneration for the Board of Directors (BOD), with a total of more than VND 106 billion, a 3.8 times increase compared to the first half of 2023.

However, in September, HPG shares continued to be sold off by foreign investors, with a total net sale value of VND 108 billion. As of the morning of September 5, this stock was still being net sold, with a value of more than VND 52 billion, extending the streak of net selling to 22 consecutive sessions. The selling pressure from foreign investors pushed HPG stock down to its lowest level since the beginning of the year, dropping 15% from its peak in June to VND 25,250 per share in the trading session on September 5.

Hòa Phát's market capitalization also fell sharply by more than VND 27,000 billion, to VND 161,500 billion (equivalent to USD 6.5 billion). This means Hòa Phát is no longer among the top 10 most valuable companies on the Vietnamese stock exchange.

The global steel industry is currently in a difficult phase, with future rebar prices falling to around CNY 3,000/ton, the lowest level in 8 years. Hot-rolled coil (HRC) prices also dropped below USD 700/ton, a 4-year low. This sharp decline is largely due to China's manufacturing PMI falling to 49.1 in August, the sharpest drop this year, and China's construction PMI also fell to 50.6, the weakest growth recorded since data collection began in 2020.

This downturn has caused Chinese steel mills to shift to the international market to compensate for domestic demand, further pressuring steel prices to drop.

In this context, domestic steel companies, including Hòa Phát, are awaiting a decision from the Ministry of Industry and Trade regarding anti-dumping investigations, hoping to alleviate pressure on the domestic market. The investigations focus on imported hot-rolled steel from China and India, as well as galvanized steel from China and South Korea.

However, Vietnam's steel industry also received unfavorable news as the European Commission (EC) and India's Directorate General of Trade Remedies (DGTR) announced the initiation of anti-dumping investigations on some hot-rolled steel products originating from or exported by Vietnam.

Optimistic signals from the domestic market despite profit declines

Currently, securities companies remain optimistic about HPG's ability to recover its business results thanks to momentum from the domestic real estate market and increased public investment. According to Agribank Securities (Agriseco), Hòa Phát's consumption volume is expected to improve thanks to contributions from domestic construction steel, along with a projected increase in gross profit margin due to a decrease in input material costs.

According to the Profit 500 ranking announced by Vietnam Report JSC, HPG's pre-tax profit in 2023 was VND 7,800 billion, a significant decrease from nearly VND 10,000 billion in 2022, and the company is no longer in the top 10 most profitable private enterprises in Vietnam.

According to Doanhnghiepvahoinhap.vn, Hòa Phát Group, formerly Hòa Phát Steel Corporation, was established under the Law on Enterprises of Vietnam and was granted the initial Business Registration Certificate No. 0503000008 by the Department of Planning and Investment of Hưng Yên Province on October 26, 2001. On January 9, 2007, the company officially transformed into Hòa Phát Group Joint Stock Company, under the 8th amendment of the Business Registration Certificate.

It is known that Hòa Phát Group's headquarters is located at Phố Nối A Industrial Park, Giai Phạm Commune, Yên Mỹ District, Hưng Yên Province. The company's Business Registration Certificate has undergone several amendments, with the most recent update on June 27, 2024, under registration number 0900189284.

On April 11, 2024, Hòa Phát's General Meeting of Shareholders approved a plan to distribute dividends for 2023 in the form of shares at a rate of 10% (shareholders owning 10 common shares will receive 1 additional share issued from the surplus capital and undistributed post-tax profit). The Board of Directors officially approved this plan on April 23, 2024. The list of shareholders entitled to receive the dividend was finalized on June 3, 2024.

On June 17, 2024, the Ho Chi Minh City Stock Exchange approved a change in listing related to the issuance of shares as dividends, with a total of 581,464,500 additional listed shares. By June 27, 2024, Hòa Phát had received the 36th amended Business Registration Certificate, marking an increase in the company's charter capital from VND 58,147,857,000,000 to VND 63,962,502,000,000 thanks to the issuance of shares as dividends.

According to research, Hòa Phát Group, under the leadership of Mr. Trần Đình Long (born 1961 in Hải Dương), is currently witnessing impressive growth in the personal assets of the Chairman of the Board of Directors. According to Forbes' 2024 global list of USD billionaires, Mr. Trần Đình Long has been recognized for a remarkable breakthrough in assets, with the fastest growth rate among Vietnamese billionaires. Mr. Long has surpassed other prominent names like Phạm Nhật Vượng, Hồ Hùng Anh, and Nguyễn Đăng Quang, leading in asset growth over the past year.

Specifically, Mr. Trần Đình Long's assets increased significantly, with an addition of USD 800 million over the course of a year, bringing his total assets to USD 2.6 billion. Thanks to the success of Hòa Phát Group and the strong development of the steel market, he currently ranks third on the list of the richest individuals on the Vietnamese stock exchange.

This strong growth is partly due to the recovery and rising price of HPG stock. HPG shares rose from around 25,100 VND/share today on September 6. This increase not only reflects the recovery of the steel market but also demonstrates Mr. Trần Đình Long's leadership capabilities and strategic vision in developing Hòa Phát Group.

Nghe Nhan