HAGL Buys Back $15 Mln Stocks From Credit Suisse

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Updated : Sun, August 5, 2012,12:00 PM (GMT+0700)

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Hoang Anh Gia Lai chairman Doan Nguyen Duc

Hoang Anh Gia Lai Joint Stock Corp (HAGL) last month spent $15 million to buy back its own stocks from Credit Suisse.

The total value of the buyback is equal to 97 percent of the total face values of those stocks, according to the latest operating statement of HAGL, coded HAG on Ho Chi Minh Stock Exchange.

HAGL would continue the buyback to reduce exchange rate risks.

In addition, in June, HAGL sold 10 million shares for its hydropower sector to investors to rake in VND313 billion.

HAGL pre-tax profit in the first half of this year is estimated at VND232 billion.

Regarding rubber planting, as of June 30, 2012, HAGL completed 8,800 hectares of rubber plantation. Of these, 1,300 hectares was in Vietnam, 3,000 hectares was in Laos and the remaining was in Cambodia.

HAGL is expected to start to exploit 7,000 hectares of rubber in 2013.

HAG is building rubber processing plant with an annual capacity of 25,000 tons in Attapeu, and start building the latex processing plant with an yearly capacity of 20,000 tons at Ham Rong, Gia Lai.

Regarding sugar, HAG planted 5,000 hectares, and is expected to grow by 1,000 hectares in the fourth quarter. Sugar factories and power plants have around 70 percent of their equipments installed and is expected to commence operations in November.

Regarding hydropower plant, HAGL completed the Dak Srong 3B with a capacity of 19.5 MW early May. Ba Thuoc 2 hydropower plant is expected to go into operation in late August with a capacity of 80 MW.

HAG is building some hydropower plants including Ba Thuoc 1, Dak Srong 3A, and Nam Kong 2.

On the exploitation and processing of iron ore, in H1/2012, HAG produced 130,000 tons, and sell 100 thousand tons to Hoa Phat Group to collect VND156 billion. It is expected to mine 170,000 tons in H2/2012.

HAG’s iron mine in Laos is expected to go into operation in December.

Regarding real estate, the HAG will hand over the apartments in An Tien project to its customers in August-October 2012. Customers of An Tuan project will also get their apartments starting next month.

In addition, HAG project is completing Phu Hoang Anh, Hoang Anh Incomex, Phuc Bao Minh, and Thanh Binh projects.

Downgraded, again

Standard & Poor’s (S&P) rating agency late last month said it maintained long-term corporate credit rating on HAGL at B-, stating the rating “reflects the company’s weak liquidity and its exposure to the economic, political, and regulatory risks of operating in Vietnam, Cambodia, and Laos.”

The rating also reflects HAGL’s cyclical cash flows and execution risks associated with the company’s planned large capital expenditure in 2012. HAGL’s favorable cost structure for property development and established brand name in Vietnam temper these weaknesses.

“We assess the company’s business risk profile as “vulnerable” and its financial risk profile as “aggressive”,” it said.

HAGL then released some feedback, stating that S&P did not contact HAGL to update information before releasing the rating, said Vo Truong Son, deputy general director of HAGL. HAGL is not in poor liquidity, he added.

“HAGL had prepared capital sources for Q4/2012 by issuing 10 million hydropower shares for strategic investors to earn VND313 billion.”

“The enterprise is preparing legal procedures to sell Minh Tuan project’s land lots, which is expected to finish before the end of this quarter and bring about around VND560 billion.

“In addition, HAGL is still gaining money from customers buying An Tien, first phase of Phu Hoang Anh and Hoang Anh River View projects,” Son said.

In early March 2012, Fitch Ratings revised the outlook of the Vietnam-based property developer to ‘negative’ from ‘stable’ due to negative effect caused by the current stagnancy in local property sales.

HAG’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) have been affirmed at ‘B’.

“The outlook revision reflects the higher credit risk faced by HAGL due to a sharp drop in property sales in southern economic hub of Ho Chi Minh City,” Fitch said.

HAGL spokesman Vo Truong Son said it is unreasonable since Fitch based its decision solely on the book value of HAGL assets when calculating the possible recovery of our unsecured debts.

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