A recent independent audit into Hoang Anh Gia Lai Group (HAGL) revealed many issues troubling one of Vietnam’s multifaceted giants, sending its stocks to a record low.

HAGL, owned by mogul Doan Nguyen Duc, is trading on the markets via the HAG and HNG stocks, with the latter owned by its agriculture arm, Agrico.

HAG closed Wednesday’s session at VND6,700 a share, down 2.9 percent, while HNG dropped 4.3 percent to VND6,600 a share, the lowest-ever prices for both cases. 

HAG’s value has dropped 67.5 percent compared to a year ago while HNG is down 80 percent from July 2015, when Arigco began listing.

The drops came after HAGL released its audited financial report for Q4/2015, which unearths the beleaguered operations of the company.

The firm currently invests in realty development, rubber, sugarcane, cattle and football - running a top-flight football club of the same name and owning a training academy backed by English giants Arsenal.

While HAGL declared in the financial report that its after-tax accumulated profit by the end of Q4/2015 was VND679 billion (US$30.31 million), Ernst & Young Vietnam found that the real figure was VND602 billion ($26.88 million).

A HAGL-developed realty project in Myanmar. Photo: Tuoi Tre

The auditor also disclosed that HAGL “violated some terms and conditions in its bond loans,” economic newswire VnEconomy reported, citing the audit results.

As of the end of 2015, HAGL had borrowed a total of VND27.09 trillion ($1.21 billion) from bank loans and bonds, and is due to repay VND8.29 trillion ($370 million) by the end of this year.

Such issues indicate that there are uncertain factors in the company’s operations and its ability to operate continually is in doubt, according to the auditor.

According to the audit report, 31 percent of the VND27.09 trillion debt is from short-term loans, with local lender BIDV being the biggest creditor.

BIDV has lent HAGL more than VND10.7 trillion ($477.68 million), whereas the second biggest lender, Eximbank, offered long-term loans worth a total of VND3.15 trillion ($140.63 million).

Vietnamese bank ACB and its securities arm, ACBS, were third with more than VND2 trillion ($89.29 million) worth of loans lent to HAGL.

‘Normal operation’

Following the negative audit results, HAGL chairman Duc, known as one of Vietnam’s cash-rich tycoons, said his company is operating normally.

HAGL is undergoing a restructuring process, after which Duc believes the operation will improve, he told newswire VnExpress.

The mogul also confirmed that he had used his cattle herd, stocks, and football academy as collateral to borrow loans.

He underlined, however, that it is a normal move in business.

“[The collaterals] are all assets of HAGL,” he said.

“There is no enterprise, in Vietnam or elsewhere, that does not use its assets as collateral to borrow loans.”

HAGL chairman Doan Nguyen Duc. Photo: Tuoi Tre

Duc said most of the difficulties stemmed from HAGL’s rubber opperation.

“It’s all about the ups and downs of business,” he said.

When HAGL started investing in rubber, for every metric ton of the product, the company invested $1,300 and raked in $5,500, Duc said.

“However prices have now fallen to $1,100,” he complained. "It is just like ten years ago when people never thought oil price would fall to below $30 a barrel.”

The tycoon reiterated that except for rubber, his business is operating normally in all of other sectors.

“What upsets me most is that investors have to suffer from the fall in stock prices,” he told VnExpress.

“As the company leader, I think investors should calm down and look at the effective projects HAGL is implementing.”

The mogul added that he is confident HAGL will thrive back once the restructuring process is completed.

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