SMC Q1 2026 Net Profit Surges 880% on Asset Sale Despite Revenue Drop

Overview

SMC Investment Trading JSC (HOSE: SMC), a steel trading company older than Hoa Phat Group, reported a net profit of 18.5 billion VND in Q1 2026, surging 880% year-on-year. The sharp increase was mainly due to a 75 billion VND gain from fixed asset liquidation, even as revenue dropped 42% to 1,072 billion VND. The company has already completed 57.4% of its full-year net profit target of 30 billion VND.

Key Facts

• Q1 2026 net profit: 18.5 billion VND, up 880% YoY.
• Q1 2026 revenue: 1,072 billion VND, down 42% YoY.
• Other income surged to 79 billion VND, including 75 billion VND from fixed asset liquidation.
• Gross profit fell 47% to 23 billion VND.
• Financial costs doubled to 45 billion VND, mainly due to higher interest expenses.
• Profit from associates turned positive at 8 billion VND.
• Total assets at March 31, 2026: ~4,200 billion VND, down ~200 billion VND from year-end 2025.
• Short-term borrowings: over 1,700 billion VND; total liabilities: 3,200 billion VND.
• SMC holds 77 billion VND in Hoa Binh Construction Group (HBC) shares, with a 36 billion VND provision.
• Provision for bad debts: 182 billion VND on total receivables of 302 billion VND.

What Happened

SMC Investment Trading JSC (SMC) released its consolidated financial statements for the first quarter of 2026, revealing a net profit of 18.5 billion VND, an 880% increase from the same period in 2025. The profit surge was largely driven by a 75 billion VND gain from the liquidation of fixed assets, which boosted other income to 79 billion VND, 3.5 times higher than the prior year. However, core business performance weakened: net revenue fell 42% to 1,072 billion VND, and gross profit declined 47% to 23 billion VND. Financial costs doubled to 45 billion VND due to higher interest expenses, while profit from associates turned positive at 8 billion VND.

For the full year 2026, SMC targets net profit of 30 billion VND, down 84.8% from 2025, and revenue of 7,000 billion VND, roughly flat. After Q1, the company has already achieved 57.4% of its annual profit target. The company also disclosed significant provisions: 36 billion VND against its 77 billion VND investment in Hoa Binh Construction Group (HBC) shares, and 182 billion VND for bad debts out of total receivables of 302 billion VND.

Market Context

SMC shares trade on HOSE and have been under pressure since 2022 due to falling steel prices and difficulty collecting receivables from construction and real estate clients. The company, once a billion-dollar revenue steel trader, has seen its financial performance deteriorate sharply. The Q1 profit spike is largely non-recurring, stemming from asset sales, while core operations remain weak. The stock’s valuation reflects ongoing sector headwinds and credit risks.

Strategic Significance

The Q1 results highlight SMC’s reliance on one-off gains to meet profit targets, masking underlying operational challenges. The company’s high debt levels (short-term borrowings over 1,700 billion VND) and significant bad debt provisions (182 billion VND) indicate persistent credit risk. The long-term strategic outlook depends on SMC’s ability to recover receivables, reduce leverage, and stabilize revenue in a competitive steel trading market. The asset sale provides temporary relief but does not address structural issues.

What to Watch

• Q2 2026 earnings release to assess revenue and profit trends.
• Updates on bad debt recovery and provision levels.
• Changes in short-term borrowings and interest expense.
• Any further asset disposals or restructuring initiatives.
• Steel price movements and demand from construction sector.