DRC CEO Le Hoang Khanh Nhut Prosecuted for Embezzlement; Q3 Profit Falls 64%

Overview

Da Nang Rubber JSC (DRC), listed on HOSE, disclosed that board member and general director Le Hoang Khanh Nhut has been prosecuted for asset embezzlement and removed from both his executive role and his status as legal representative. The disclosure landed alongside Q3 2026 results showing revenue down 15% and net profit down 64% year-on-year, leaving the tire maker without a permanent chief executive as it heads into an extraordinary shareholder meeting.

Key Facts

• Da Nang prosecutors issued arrest approval Decision No. 521/QD-VKS-P3 dated 14/10/2026 against Le Hoang Khanh Nhut; the underlying prosecution decision was dated 3/10/2026.
• The charge is asset embezzlement under Clause 2, Article 353 of the Penal Code.
• DRC’s board resolved to dismiss Nhut as general director and terminate his legal-representative status; board member and deputy general director Van Trung Tam now heads the executive board pending a replacement.
• Q3 2026 net revenue reached VND 1,048B, down 15% year-on-year; gross profit rose 6% to VND 175B and gross margin improved to 16.7% from 13.4%.
• Q3 net profit fell 64% year-on-year to approximately VND 15B, with pre-tax profit at VND 18B; selling and administrative expenses jumped to VND 55B, 2.4x the prior-year VND 23B.
• Nine-month 2026 revenue was VND 3,379B, down 10.9%, with net profit of VND 63B versus VND 82B a year earlier.
• An extraordinary 2026 shareholder meeting is planned after 20/12/2026, with a 16/11 record date; the agenda includes dismissing and electing additional board members for the 2024-2029 term.
• DRC closed at VND 9,530 per share on 23/10/2026, its lowest level in six years.

What Happened

In a 16/10/2026 extraordinary disclosure, Da Nang Rubber said it had received Decision No. 521/QD-VKS-P3 from the Da Nang People’s Procuracy approving the prosecution of Le Hoang Khanh Nhut, a board member and the company’s general director. The case was opened by the Economic Security Investigation Division of Da Nang City Police, with the prosecution decision issued on 3/10/2026 and approved on 14/10/2026. The company cited Clause 2, Article 353 of the Penal Code, the asset embezzlement provision.

The board moved quickly: a resolution dismissed Nhut as general director and ended his legal-representative status, transferring day-to-day leadership to Van Trung Tam, a board member and deputy general director, until a permanent replacement is named. Separately, DRC published Q3 2026 financial statements showing revenue of VND 1,048B and net profit of about VND 15B. Gross margin improved, but a collapse in financial income to VND 3B from nearly VND 16B, a 16% rise in interest expense to almost VND 12B, and the 2.4x jump in administrative costs drove the profit decline. The company also set an extraordinary shareholder meeting for after 20/12/2026, with a 16/11 record date, to vote on board changes.

Market Context

DRC shares on HOSE closed at VND 9,530 on 23/10/2026, a six-year low, reflecting both the leadership shock and the weak earnings print. The stock sits in the tire and rubber segment of the automobiles and parts sector, where input costs and pricing power have been under pressure through 2026. The combination of a criminal case against the chief executive and a 64% profit drop places DRC among the more distressed names in the Vietnamese mid-cap industrials space, and the six-year low suggests the market has already priced in considerable uncertainty ahead of the December shareholder meeting.

Strategic Significance

The immediate governance question is whether DRC can separate the criminal case from operations. Van Trung Tam’s interim mandate and the December meeting to reconstitute the board are the mechanisms for restoring an accountable chain of command; a credible permanent CEO and a clean legal-representative structure are prerequisites for banks, suppliers and OEM customers to keep normal terms. Operationally, the gross margin improvement to 16.7% shows the core manufacturing business still has pricing and cost traction, which makes the expense blowout and the loss of financial income the more important items to explain. For long-term holders, the thesis now hinges on governance repair rather than volume growth: the embezzlement charge raises questions about internal controls that a new board will need to address explicitly.

What to Watch

• The 16/11/2026 record date and the extraordinary shareholder meeting after 20/12/2026, including board dismissals and additions for the 2024-2029 term.
• Appointment of a permanent general director and restoration of legal-representative status.
• Any further disclosure on the scope of the embezzlement case, including the amount alleged and whether other DRC personnel are implicated; the filing does not disclose these details.
• Q4 2026 results and whether the administrative expense spike and financial income decline reverse.
• Trading liquidity and foreign-ownership filings around the six-year low in DRC shares.