Profits are rising again.
According to the Hanoi Stock Exchange (HNX), Trung Nam Solar Power Joint Stock Company (Trung Nam Solar Power) has just reported its 2023 financial results, showing that profits have reversed from a decline to an 11% increase, reaching over 278 billion VND.
Other financial indicators improved. The debt-to-equity ratio decreased from 2.17 times to 2.15 times. The bond-to-equity ratio also fell sharply from 1.81 to 1.45 times. Return on equity increased from 19.87% in 2022 to 21.53%. Equity also increased slightly.
The positive developments at Trung Nam Solar Power occurred shortly after Trung Nam Group, a major player in the energy industry, announced the sale of controlling interest in its largest solar power project to a familiar partner.
Previously, Trung Nam Solar Power Joint Stock Company was a member of Trung Nam Group and the investor of the Trung Nam Solar Power Plant project. The project has a capacity of 204MW, a maximum electricity output of approximately 450 million kWh/year, and uses over 700,000 solar panels. This project has a total investment of nearly 5,000 billion VND and is one of Trung Nam's largest-scale solar power projects.
In recent years, Trung Nam Group has faced cash flow difficulties. Many businesses within the group's ecosystem have been slow to repay bonds, while profits have tended to decline.
It is also possible that due to cash flow difficulties, Trung Nam Group was recently forced to sell its controlling stake in a solar power project considered a "golden goose" to a familiar partner.
Specifically, in early July, Trung Nam Group announced the transfer of control at Trung Nam Solar Power, selling 19.9 million shares in the company.
Trung Nam Renewable Energy Joint Stock Company (a subsidiary of Trung Nam Group) has transferred all 19.9 million shares of Trung Nam Solar Power to Asia Renewable Energy Investment and Development Company Limited (receiving 18 million shares) and Mr. Nguyen Thanh Binh, who recently became Chairman of the Board of Directors of Trung Nam Solar Power Joint Stock Company (receiving 1.9 million shares)...
Asia Renewable Energy and Mr. Nguyen Thanh Binh will act as guarantors for 12 bond packages worth VND 1,900 billion (maturing between 2026 and 2028).
Previously, in June, Trung Nam Solar Power announced a change in its legal representative. Accordingly, Mr. Nguyen Thanh Binh (1981) replaced Mr. Nguyen Dang Khoa and Mr. Nguyen Tam Thinh (Chairman of Trung Nam Group) in this position, and Mr. Binh also became the Chairman of the Board of Directors of Trung Nam Solar Power.
What does Trung Nam Group have left after withdrawing from its "golden goose"?
Thus, it can be seen that there has been a change in ownership and leadership at Trung Nam Solar Power.
Asia Renewable Energy Investment and Development is a subsidiary of Asia Industrial Engineering Corporation (ACIT). ACIT previously owned 49% of the shares in Trung Nam Solar Power Plant.
Therefore, with ACIT acquiring additional shares, it is highly likely that Trung Nam Group has lost control of Trung Nam Solar Power.
ACIT specializes in manufacturing medium and low voltage switchgear for electrical construction projects. It is a company that has undertaken many renewable energy projects for Trung Nam Group.
Previously, on July 12th, Trung Nam Solar Power was fined for failing to disclose information regarding the payment of interest and principal on bonds, and for failing to report on the financial situation and capital utilization for several years.
Over the past two years, the Trung Nam Group has repeatedly requested extensions and delayed repayments of bonds related to renewable energy projects. As a result, the group's business performance has deteriorated.
In May, Nguyen Tam Thinh, Chairman of Trung Nam Group, was recommended for a temporary travel ban due to his failure to fulfill his tax obligations. However, the Khanh Hoa Provincial Customs Department subsequently sent a document to the Immigration Department of the Ministry of Public Security canceling the travel ban for Mr. Thinh.
According to its introduction, Trung Nam Group was established in 2004 and focuses on the fields of energy, infrastructure and construction, real estate, and information and electronics industry. It is a company that started in infrastructure construction, then invested in real estate and hydropower, and more recently in renewable energy, with a series of solar and wind power projects. Some major projects include the Trung Nam Thuan Nam solar power plant (Binh Thuan, Ninh Thuan), the Ea Nam wind power plant, and the Trung Nam – Tra Vinh wind power plant…
According to Trung Nam Group's website, as of October 2021, Trung Nam Group had contributed 1.63GW of energy to the national grid, leading the private sector in this industry.
Nevertheless, over the past two years, Trung Nam Group and its member companies have faced numerous difficulties.
A subsidiary of Trung Nam Group, Trung Nam Thuan Nam Solar Power Company Limited, had previously submitted an urgent appeal to the Government regarding the risk of incidents and disruptions to the operation of the Thuan Nam 500kV transmission system. Specifically, the company was unable to negotiate with EVN to increase revenue from its power generation while simultaneously having to pay bank interest.
In 2022, Trung Nam Thuan Nam Solar Power Company Limited reported a net profit after tax that decreased by 80% compared to the previous year, falling to 81 billion VND.
In late November 2023, Trung Nam Construction Investment Joint Stock Company (Trung Nam Group) announced that it had delayed payment of nearly 107 billion VND in interest due on a bond issue worth a total of 2,000 billion VND.
As of the end of 2022, Trung Nam Group had equity capital exceeding VND 27,900 billion. Total liabilities amounted to over VND 68,100 billion (equivalent to nearly USD 2.8 billion). Total bond debt was approximately VND 24,270 billion.
In 2022, Trung Nam Group recorded a sharp decline in profit, falling to only 255 billion VND, compared to 1,635 billion VND in 2021.
Many other member units of Trung Nam Group are also facing difficulties. Trung Nam Dak Lak 1 Wind Power Joint Stock Company (the investor of the 600-hectare Ea Nam wind power plant project) incurred a loss of VND 390 billion in the first half of 2023, after a loss of VND 858 billion in 2022. This company also fell into a situation of overdue bond interest payments. Trung Nam Solar Power, Trung Nam Tra Vinh Solar Power, Trung Nam Ninh Thuan, etc., all recorded a decrease in profits compared to the previous year.
The surprising reason behind EVN's sudden halt in purchasing Trung Nam's solar power is that the investor constructed the project not according to the approved design. The Ninh Thuan Provincial Department of Construction has handled the violations regarding improper construction and ordered the demolition of the violating parts.
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