In just a few days, Doan Nguyen Duc's (Bau Duc) company has secured billions of VND to repay debts. The question remains: where does this substantial cash flow come from, and what is the current financial health of Hoang Anh Gia Lai (HAG)?

Progressing toward the "debt-free" goal

According to the announcement from Hoang Anh Gia Lai Joint Stock Company (HoSE: HAG), chaired by Doan Nguyen Duc, the company recently made two principal bond repayments to the Bank for Investment and Development of Vietnam (BIDV) totaling over 1 trillion VND ($39.2 million) in late 2024.

This significant repayment has reduced the outstanding principal from a 6.596 trillion VND bond tranche, originally set to mature on December 30, 2026, to approximately 766 billion VND.

Hoang Anh Gia Lai aims to fully clear the remaining amount by the second quarter of 2025, aligning with Bau Duc's prior declarations of achieving a "debt-free" status.

The repayments have positively influenced the HAG stock. Recently, the company’s leadership and affiliates have shown confidence by purchasing more HAG shares, boosting investor sentiment.

But the main question is: where did Bau Duc find such substantial resources to resolve a debt burden that once amounted to over a billion USD?

Source of funds

The more than 1 trillion VND used to repay BIDV bonds in late 2024 primarily came from Hoang Anh Gia Lai International Agriculture Joint Stock Company (HAGL Agrico - HNG), as disclosed by Bau Duc.

HAGL, HAGL Agrico, and BIDV had earlier signed a three-party agreement to settle this debt within 2024. Although HAGL Agrico now belongs to Thaco Group under billionaire Tran Ba Duong, HAGL retains a stake in the company.

Despite HNG being delisted due to consecutive annual losses, HAGL recently received payments from HNG, improving its financial position.

This development is part of a multi-billion-dollar agreement between HAGL and Thaco that began in August 2018. Thaco acquired significant shares in HAGL Agrico, injected funds, and committed to restructuring HNG’s debt.

Positive signals amid challenges

In recent years, HAGL has alleviated financial strain by selling its agricultural segment to Thaco, receiving substantial funds to repay debts, and attracting capital from entities like LPBank and Thaiholdings, owned by Nguyen Duc Thuy.

The company has also benefited from expanding its durian plantation and capitalizing on high durian prices.

As of Q3 2024, however, HAGL's debt remains considerable. Short-term loans exceed 4.2 trillion VND, while long-term debts stand near 3.1 trillion VND. Bonds account for more than 4.1 trillion VND, including both long-term (2.9 trillion VND) and short-term obligations (over 1.2 trillion VND).

Despite selling several assets, such as the Hoang Anh Gia Lai Hotel and Hoang Anh Gia Lai Medical University Hospital, the company still faces liquidity challenges, exacerbated by delayed payments from HNG and unsold non-performing assets.

At the 2024 Annual General Meeting, Bau Duc expressed optimism about attracting investment once accumulated losses are cleared. With a profit target of 1.32 trillion VND in 2024, HAGL has not yet achieved this goal but anticipates annual profits of 2 trillion VND in coming years.

Long road ahead

HAGL's challenges persist, including high financial leverage and the use of short-term funds for long-term assets. The agricultural sector’s volatility, coupled with rising costs, climate risks, and disease outbreaks, poses additional threats.

As of December 31, 2024, HAG stock traded at 12,050 VND/share, reflecting mild optimism. The company’s diversified model of growing bananas, durians, and raising banana-fed pigs (dubbed the "two crops, one livestock" model) proved profitable in 2024, thanks to soaring durian and pig prices.

However, the immediate priority remains reducing debts to institutions like LPBank (over 1.54 trillion VND as of September 2024).

HAGL has made significant strides in restructuring and stabilizing its operations but must navigate an uncertain future in Vietnam's dynamic agricultural market.

Manh Ha