Mystery company may continue gobbling up failing steel giant Over the last few months, Thai Hung Trading Joint Stock Company (Thai Hung) repeatedly purchased huge numbers of Thai Nguyen Iron and Steel Corporation’s stocks (Tisco—Ticker TIS on HoSE, HNX, and UPCoM), and it is rumoured that it will continue expanding its ownership in Tisco.   Unclear future Vietnam Steel Corporation (VnSteel) is now the biggest shareholder of Tisco, with 42.11 per cent. The second biggest one is Thai Hung, with 20 per cent. However, over the last few months, Thai Hung repeatedly raised its stakes in Tisco. In particular, at the end of April 2017, Thai Hung completed the purchase of 17,817,900 TIS shares from State Capital Investment Corporation (SCIC) at the price of VND11,216 ($0.5) per share, and an additional 290,000 shares from the stock exchange. Thus, Thai Hung’s stake in Tisco increased from 14.2 million shares (7.72 per cent) to 32.3 million shares (17.55 per cent). A few days ago, at the beginning of May 2017, Thai Hung purchased 4.5 million more shares, increasing its holdings to 36.8 million shares, an equivalent of 20 per cent stake in Tisco. However, it seems that Thai Hung is not satisfied with its current position. Thai Hung is planning to purchase more stocks from the number one giant of the Vietnamese steel industry, VnSteel. Nguyen Tong Thang, marketing director of Thai Hung, said that currently, the company cannot give a definitive answer to whether it would purchase TIS shares from VnSteel. Regarding VnSteel, a representative said that it is waiting for guidance from the government agency in charge of this matter. Previously, at the 2017 annual shareholders’ meeting, Tisco passed an important document that gives investors the right to not publicise their purchases of TIS shares from shareholders who own at least 25 per cent and have voting rights. Therefore, any investor can raise its ownership in Tisco without the complex procedures of public purchase, which attracted heavy attention. Notably, as a representative of the state capital in Tisco and also the biggest shareholder, VnSteel voted in favour of this document. Tisco also had some changes in human resources recently. Particularly, at the beginning of May 2017, Tran Anh Dung was elected for the position of control chief to replace Tran Man Huu. At the middle of May 2017, Thai Hung dismissed three board members, including Nguyen Quoc Huy (former board chairman), Vu Hoang Long, and Nguyen Tien Dung (former deputy general director). Thai Hung, an emerging giant in the steel industry Thai Hung is an emerging name in the Vietnamese steel industry. It used to be a private enterprise in Thai Nguyen province. The company’s main activities are manufacturing construction steel and other products related to steel and iron, forestry business, transport, hotel, restaurant services, and so on. At present, this enterprise has VND1 trillion ($44 million) of chartered capital and its annual revenue is about VND15-18 trillion ($600-720 million). In 2017, Thai Hung targets to generate about VND15.5-16 trillion ($620-640 million) in revenue, and VND320 billion ($12.8 million) in after-tax profit. Before purchasing TIS, in November 2016, Thai Hung came to control another steel giant called Vietnam-Italy Steel Joint Stock Company (VIS—ticker VIS on HoSE). In August 2016, when Song Da Corporation divested from VIS, Thai Hung purchased the entire divested amount, as well as a huge number of VIS stocks from the market at the same time. In particular, in November 2016, Thai Hung purchased an additional 12.8 million VIS stocks, an equivalent of 25.99 per cent stake, thus increasing its total stakes in VIS to 50.98 per cent. In April 2017, Thai Hung released its plan of purchasing 14.22 per cent more of VIS. If this plan is implemented, Thai Hung will hold more than 75 per cent of VIS. About ten years ago, Tisco signed a contract with Metallurgical Corporation of China (MCC), making MCC the main EPC (Engineering, Procurement, and Construction) contractor for the second phase of Thai Nguyen Iron and Steel plant, with a total investment of over VND3.8 trillion ($152 million). The project was implemented in 2007, but it was delayed due to the financial crisis. In 2009, it was resumed, but the total capital needed has increased to over VND8.1 trillion ($324 million), making it difficult for Tisco to collect the funds. In July 2012, the project was delayed again, because MCC withdrew to China, leaving behind the unfinished project. Since then the project has been left abandoned for five years now. According to a report, the main reasons behind the capital shortage was the increased costs for part C (construction and installation), which was assigned to Vietnamese contractor Vietnam Industrial Construction Corporation (Vinaincon), while the capital of parts E and P (electro and mechanics), assigned to MCC, stayed in line with the contract. The second phase of the expansion of Thai Nguyen Iron and Steel plant is one of the twelve heavy loss-making projects of the Ministry of Industry and Trade. VIR