SMC Steel Holds 350B VND Novaland Real Estate as H1 Profit Reverses

Overview

SMC Investment Trading JSC (HOSE: SMC), a steel trader, reported a net profit of 45 billion VND in H1 2026, reversing a loss of 81 billion VND in the same period last year. However, the profit was driven by asset disposals, not core operations, which remained loss-making. The company also holds over 350 billion VND in real estate projects linked to Novaland ecosystem entities, raising questions about its strategic direction and liquidity.

Key Facts

• H1 2026 net profit: 45.06 billion VND, versus a loss of 81 billion VND in H1 2025.
• Revenue fell 37% year-on-year to 2,386.2 billion VND; gross margin was only 2.6%.
• Core operating loss: 12.85 billion VND; other profit of 67.53 billion VND, including 57.78 billion VND from fixed-asset disposals, drove the bottom line.
• Short-term assets: 1,491 billion VND; short-term liabilities: 2,509 billion VND, prompting auditor concern about going-concern viability.
• Cash and equivalents dropped 82% to 21.46 billion VND from 121.32 billion VND at start of year.
• Total borrowings and finance leases: ~1,301.7 billion VND, equal to 124% of equity; bank debt of 1,073 billion VND, with VietinBank (~500B), BIDV (~314B), and MSB (~210B) as largest creditors.
• Real estate under construction: 350.8 billion VND, including 115.15 billion VND in NovaWorld Hồ Tràm and 235.64 billion VND in projects with Thành phố Aqua, BĐS Đà Lạt Valley, and Địa ốc Ngân Hiệp.

What Happened

According to the reviewed consolidated financial statements for H1 2026, SMC returned to profitability, but the quality of earnings is weak. The company’s gross profit of 61.3 billion VND was more than offset by financial, selling, and administrative expenses totaling nearly 125 billion VND, leading to a 12.85 billion VND operating loss. The net profit of 45.06 billion VND came almost entirely from other income, particularly gains from selling fixed assets and other long-term assets, which generated nearly 360 billion VND in cash proceeds.

Liquidity remains a major concern. The auditor highlighted that short-term liabilities exceed current assets by over 1,000 billion VND, creating material uncertainty about the company’s ability to continue as a going concern. Cash reserves have dwindled to just 21.46 billion VND, while total debt stands at 1,301.7 billion VND, with significant bank borrowings from VietinBank, BIDV, and MSB.

A notable balance-sheet item is 350.8 billion VND in real estate costs classified under construction in progress. This includes investments in NovaWorld Hồ Tràm and other projects linked to Novaland-related entities. The company says these purchases were settled by offsetting receivables from the sellers, and the properties are pledged as collateral for loans.

Market Context

SMC’s shares closed at 10,300 VND on September 1, 2026, reflecting a low valuation amid ongoing financial stress. The company operates in the steel trading sector on HOSE, which has faced weak demand and margin compression. The real estate exposure to Novaland-linked projects adds a layer of risk, as Novaland has faced its own liquidity challenges. The broader Vietnamese market has shown resilience, but SMC’s fundamentals remain under pressure, with negative working capital and reliance on asset sales.

Strategic Significance

For long-term investors, SMC’s situation highlights the risks of diversification into real estate without clear operational synergies. The company’s core steel trading business is struggling, and the real estate holdings, while potentially valuable, are illiquid and tied to a troubled ecosystem. The use of debt offsetting to acquire these assets suggests complex related-party transactions that could obscure true financial health. The auditor’s going-concern warning underscores the urgency of addressing liquidity. If SMC can successfully monetize its real estate or improve core operations, there may be upside, but the current trajectory is precarious.

What to Watch

• Q3 2026 earnings release: whether core operations turn profitable or continue to rely on asset sales.
• Updates on the sale or development of the 350.8 billion VND real estate portfolio, especially NovaWorld Hồ Tràm.
• Any restructuring of bank debt or new financing arrangements with VietinBank, BIDV, or MSB.
• Changes in management or major shareholder moves, as recent insider trading activity suggests potential shifts.
• Regulatory or legal developments related to Novaland entities that could affect the value of SMC’s real estate holdings.