SMC Plans VND 368B Rights Issue to Repay Debt, Targets 84.8% Profit Drop

Overview

SMC Investment Trading (SMC, HoSE) plans to raise over 368 billion VND (approximately USD 14.72 million) through a rights issue of 36.8 million shares at 10,000 VND per share to existing shareholders. The proceeds will be used to repay bank loans and supplier debt. Concurrently, the company targets a steep 84.8% drop in 2026 after-tax profit to 30 billion VND, signaling continued pressure in the steel sector.

Key Facts

• SMC plans to issue 36.8 million shares to existing shareholders at a ratio of 2:1 (two rights to buy one new share).
• The issue price is 10,000 VND per share, aiming to raise over 368 billion VND (about USD 14.72 million).
• Proceeds will be used to repay bank loans and supplier debt.
• The rights issue is expected to be completed in 2026, pending approval from the State Securities Commission.
• If successful, SMC’s charter capital will increase from nearly 736.8 billion VND to over 1,104.8 billion VND.
• The company targets 2026 revenue of 7,000 billion VND (down slightly from 2025) and after-tax profit of 30 billion VND, an 84.8% decline.
• In Q1 2026, SMC reported net revenue of 1,072.5 billion VND (down 41.9% YoY) and after-tax profit of 17.2 billion VND (versus 126.8 million VND in Q1 2025).

What Happened

SMC Investment Trading (SMC) announced plans to raise over 368 billion VND through a rights issue to existing shareholders, as approved at the company’s annual general meeting on April 24, 2026. The company will issue 36.8 million shares at 10,000 VND per share, with a 2:1 ratio (two rights entitle the holder to purchase one new share). The funds will be used to repay bank loans and supplier debt, which stood at over 1,770.8 billion VND as of March 31, 2026, representing 54.9% of total liabilities.

The company also set conservative 2026 targets: revenue of 7,000 billion VND (down slightly from 2025) and after-tax profit of 30 billion VND, an 84.8% decline from the prior year. Steel sales volume is expected to reach 420,000 tons, down 8.7%. Despite the weak outlook, SMC’s Q1 2026 profit of 17.2 billion VND already achieved 57.3% of the full-year target.

Market Context

SMC shares closed at 11,750 VND on May 13, 2026, unchanged from the previous session, with low volume of 358,300 shares. The stock has been under pressure amid a challenging steel market, with weak demand and high input costs. The rights issue, priced at a 14.9% discount to the current market price, may dilute existing shareholders but provides necessary liquidity to reduce debt. SMC’s total liabilities stood at nearly 3,223.3 billion VND as of March 31, 2026, with borrowings accounting for over half.

Strategic Significance

The rights issue is a defensive move to strengthen SMC’s balance sheet by reducing debt and improving financial flexibility. The sharp profit target cut reflects management’s realistic view of persistent headwinds in the steel sector, including weak construction demand and margin compression. The capital raise, while dilutive, may help the company avoid more severe financial distress and position it for a recovery when market conditions improve. However, the 84.8% profit decline target underscores the severity of the current downturn.

What to Watch

• Approval timeline from the State Securities Commission for the rights issue.
• Q2 2026 earnings release to see if profit momentum continues (Q1 achieved 57.3% of full-year target).
• Steel price trends and demand indicators in Vietnam, particularly from the construction sector.
• SMC’s debt reduction progress and any changes in borrowing levels.
• Potential further capital-raising or restructuring actions if the steel downturn persists.