HBC plans 51.4M share debt swap at 2.3x market price

Overview

Hoa Binh Construction Group (HBC, UPCoM) announced a plan to issue over 51.4 million shares to swap nearly VND 514.2 billion of debt to 99 creditors. The swap price is set at VND 10,000 per share, 2.3 times the current market price of VND 4,300. The company also reported Q2/2026 net profit down 54.8% YoY despite revenue up 108%.

Key Facts

• HBC plans to issue 51.4 million shares to swap VND 514.2 billion of debt.
• Swap ratio: 1 share per VND 10,000 of debt.
• Swap price is 2.3 times the market price of VND 4,300 (as of Aug 3, 2026).
• 99 creditors involved, mostly contractors, equipment lessors, and suppliers.
• Largest allocation: Matec Construction Machinery JSC gets 9.2 million shares for VND 92.2 billion debt.
• Q2/2026 net profit: VND 18.9 billion, down 54.8% YoY; revenue up 108% to VND 1,946.5 billion.
• H1/2026 net profit: VND 41.6 billion, down 19.1% YoY; revenue up 99.7% to VND 3,268.6 billion.

What Happened

Hoa Binh Construction Group (HBC) announced via a board resolution that it will issue over 51.4 million shares to swap nearly VND 514.2 billion of debt. The swap ratio is 1:10,000, meaning each new share exchanges for VND 10,000 of debt. The company has publicly listed 99 creditors, primarily contractors, construction equipment lessors, and suppliers. The largest recipient is Matec Construction Machinery JSC, which will receive over 9.2 million shares for VND 92.2 billion of debt, followed by Best Quality Construction JSC (VND 32.8 billion) and Interhouse LA JSC (VND 23.5 billion).

The plan is expected to be implemented in Q3/2026 or after receiving approval from the State Securities Commission. In its Q2/2026 financial report, HBC recorded net revenue of VND 1,946.5 billion, up 108% YoY, and gross profit of VND 222.4 billion, up 3.7 times. However, net profit fell 54.8% to VND 18.9 billion due to lower financial income and other income, as well as higher financial and selling expenses. For H1/2026, revenue reached VND 3,268.6 billion (up 99.7%) but net profit dropped 19.1% to VND 41.6 billion, completing only 16.6% of the full-year profit target of VND 250 billion.

Market Context

HBC shares closed at VND 4,300 on August 3, 2026, on the UPCoM exchange. The stock has been under pressure due to the company’s accumulated losses of nearly VND 2,026 billion as of June 30, 2026, though this has improved from the start of the year. The debt-to-equity swap is part of a broader restructuring effort, but the sharp decline in Q2 profit despite strong revenue growth raises concerns about margin sustainability. The construction sector in Vietnam has been recovering, but HBC’s financial health remains fragile.

Strategic Significance

The debt-to-equity swap is a critical step for HBC to reduce its debt burden and improve its balance sheet. By converting VND 514.2 billion of debt into equity, the company will lower interest costs and improve solvency, which is essential for securing new contracts and restoring investor confidence. However, the swap price at 2.3 times the market price suggests existing shareholders will face significant dilution. The company’s ability to execute its 2026 business plan, which targets VND 10,000 billion in revenue and VND 250 billion in net profit, will depend on its operational efficiency and the success of this restructuring.

What to Watch

• Approval from the State Securities Commission for the share issuance.
• Q3/2026 financial results to see if revenue growth translates into profit.
• Progress on reducing accumulated losses and improving working capital.
• Any further debt restructuring or capital raising plans.
• Market reaction to the dilution and the company’s ability to meet its full-year targets.