Socialist Republic of Vietnam
Hoa Sen Group
Independence – Freedom - Happiness
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No. 01/TBQHCĐ/2013
Binh Duong, March 06th, 2013
THE ANSWERS TO SHAREHOLDERS’ QUESTIONS
AT ANNUAL SHAREHOLDERS’ MEETING
IN FISCAL YEAR 2012 – 2013
To: Shareholders of Hoa Sen Group
On behalf of the Board of Directors, I, Pham Gia Tuan – Member of the Board of Directors cum Head of
Investor Relation Sub – committee, would like to thank all of shareholders for your interest in Hoa Sen
Group’s development. We hope that you will continue to support Hoa Sen Group in forthcoming time to
mutually get greater achievements.
At Annual Shareholders’ Meeting of Hoa Sen Group in fiscal year 2012 – 2013 on March 06th, 2013,
Investor Relation Sub – committee received shareholders’ questions relating to Hoa Sen Group’s activities.
Because of limited time, we only can answer some questions. Investor Relation Sub – committee would like
to answer the remained questions through this document.
Question 1:
Shareholder’s name/Authorizer’ name: Nguyen Huy Hoa
ID Card No./Passport No.: 023242140
Shareholder’s code: HSG-1410
Question: Through the report of the Board of Directors, I find some real estate projects. Is Hoa Sen Group
also a multidisciplinary corporation?
We would like to answer as follows:
As we mentioned at the Annual Shareholders’ Meeting in fiscal year 2012 – 2013, in forthcoming period, our
policy is not spreading investment but concentrating on developing core business sectors. Those are steel
sheet, steel and plastic
Our real estate projects in the report of the Board of Directors were approved by the General Assembly of
Shareholders and deployed in the period from 2008 to 2010.
However, in accordance with Resolution No. 02/NQ/ĐHĐCĐ/HSG/2011 of the General Assembly of
Shareholders dated June 16th, 2011, Hoa Sen Group will transfer above projects to concentrate on capital
source for manufacturing and business activities. At present, Hoa Sen Group completed the transfer of Pho
Dong – Hoa Sen Building Project. Hoa Sen Group is searching transferees of other remained projects.
Question 2:
Shareholder’s name/Authorizer’s name: Bao Minh Securities Joint Stock Company
ID card No/Passport No:
Shareholder’s code: HSG-4690
Question:
How does Hoa Sen Group prepare for trade barrier when strengthening export?
Does the Board of Leaders face any problem of raw materials when increasing production capacity?
We would like to answer as follows:
1. How does Hoa Sen Group prepare for trade barrier when strengthening export?
Facing trade barrier is a key issue which is anticipated by the Board of Leaders when strengthening
export.
Recently, some countries which are export partners of Hoa Sen Group in the area such as Thailand,
Malaysia have already warned that steel imported in their markets increases strongly and steel
companies in above countries will request Trade Remedy Agency of their countries to apply trade
barrier to imported steel. Until now, besides giving warning, those countries still have no specific
actions relating to this issue.
Although Indonesia initiates trade remedies to the imported coated steel sheet/zinc-aluminum alloy, it
gets no result until now.
At present, Hoa Sen Group’s import is still carried out favorably
In order to respond to worst situation which may occurred, Hoa Sen Group carried out following
necessary steps:
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Establish anti – dumping and safeguard measure team
Invite Mr Luong Van Tu, Deputy Minister of Ministry of Industry and Trade cum WTO Chief
Negotiator as senior counselor of trade protection
Regularly update and report status of trade protection in export market to Ministry of Finance,
Ministry of Industry and Trade and functional agencies of Ministry of Industry and Trade such
as Vietnam Competition Authority, Export Import Agency, Asia – Pacific Market Department
and Vietnam Steel Association
Implement domestic and foreign media, especially in export countries to show our clear
viewpoint to unreasonable measures of trade protection which are against trade rules of WTO
In term of cases in Indonesia, we hired a famous lawyer in Jakarta to assist us in fighting
against the lawsuit. In early last February, we successfully held a Customer Gratitude Party in
Jakarta and Indonesia with the attendance of Vietnamese Ambassador and Trade
Commissioner in Indonesia and Indonesian clients. At the party, Indonesian clients supported
Hoa Sen Group and totally agreed to draw up petition to KPPI to object to proposal of
applying safeguard measures in Indonesia.
2. When increasing the capacity of the plant, does the Board of Leaders face any difficulty of raw
materials?
When deciding to expand the scale, the Board of Leaders has already calculated carefully and had
necessary preparation. At present, Hoa Sen Group is building a good relationship with many suppliers
of raw materials so we do not face any difficulty of raw materials.
Question 3:
Shareholder’s name/Authorizer’s name: Nil
ID Card No/Passport No: Nil
Shareholder’s code: HSG – 1686
Question:
 How does your business strategy change when the price of steel materials decreases? (At present,
Corporation is applying policy of average cost price)
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In addition to the reason of interest rate decrease and stable VND currency, what are factors which
contribute to making profit of fiscal year 2011 – 2012 increase much in comparison with your plan?
Do these factors continue to contribute to making profit of 2013 increase more?
We would like to answer as follows:
1.
How does our business strategy change when the price of steel materials decreases?
In order to minimize inventory expenses as well as the influence of fluctuation of raw material price,
Hoa Sen Group applies the supply chain in accordance with model of “Just in time”. Based on the
movement of raw material price in the market as well as our manufacturing demand, the
Corporation will calculate quantity and appropriate time to purchase raw materials to get best
purchase price with the most appropriate quantity which ensures sufficient raw material source for
manufacturing and business activities and minimize the inventories and decrease Corporation’s
expenses
Moreover, in case raw material price decreases suddenly, the Corporation will focus on rapidly
selling inventories thanks to wide distribution network to ensure the cash flow. Since then, the
Corporation has condition to purchase raw materials with lower price to decrease raw material cost
price and confine the influence of decreasing raw material price.
2.
In addition to the reason of interest rate decrease and stable VND currency, what are factors
which contribute to making profit of fiscal year 2011 – 2012 increase much in comparison with
your plan? Do these factors continue to contribute to making profit of 2013 increase more?
In addition to basic factors such as interest rate decrease and stable exchange rate, because Hoa Sen
Group implemented some manufacturing and business solutions, profit after tax of fiscal year 2011 2012 increases much more in comparison with our plan. Our solutions are as follows:
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Enhance the effect of sale channels. Especially, that export channel develops strongly helps
Corporation increase turnover to create premise for increasing profit.
Reducing expenses is carried out effectively including checking manufacturing process and
bidding process, offering competitive price, purchasing raw materials in right time, rapidly
settling inventories, etc…
Stabilize selling price when raw material price decreases strongly thanks to good promotion of
prestige of brand name.
Increase rate of commodities which have high profit level
With our achieved results, the Corporation will continue to emphasize on implementing above
solutions. In 2013, the government still concentrates on stabilizing macroeconomics, controlling
inflation and stabilizing exchange rate and interest rate so Corporation’s profit is expected to increase
more.
Question 4:
Shareholder’s name/Authorizer’ name: Nguyen Thuy Bich Lan
ID Card No./Passport No.: Nil
Shareholder’s code: HSG-4765 and HSG – 4775
Question:
What does the Board of Chairs evaluate the competitiveness of Hoa Sen Group with Formosa Project
after it is completed?
We would like to answer as follows:
Formosa Steel Complex Project of Formosa Corporation – Taiwan at Vung Ang Economic Zone, Ha Tinh
Province is a plant project of refining steel ore and manufacturing hot rolling coil. Those are Hoa Sen
Group’s input materials. After Formosa Project is completed, it will help Hoa Sen Group as well as other
steel companies have more choice in searching supplying source of raw materials. This is not a competitive
relationship.
Question 5:
Shareholder’s name/Authorizer’s name: Dinh Hoang Phuong
ID Card No./Passport No.: Nil
Shareholder’s code: HSG-3988
Question:
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How is Hoa Sen Group’s export market structure in accordance with turnover?
In term of orientation of developing strategy of export market in forthcoming 3 years, what are Hoa
Sen Group’s target markets?
We would like to answer as follows:
In fiscal year 2011 – 2012, export turnover of Hoa Sen Group approximately attained 180 millions USD
which are equivalent to 37.2% of total turnover. Our targets for period from 3 to 5 years are to strive to
increase rate of export turnover to 45 – 50% of total turnover.
At present, Hoa Sen Group is one of leading steel export Corporation in area. Hoa Sen Group’s products are
sold in nearly 30 countries which are mainly countries in ASEAN and Asia.
Our coming orientations are to expand export to International markets, especially to large and full – potential
markets such as US, Australia and Europe… However, these are also markets which strictly require products’
quality. Therefore, in order to penetrate and create a position in these markets, Hoa Sen Group has following
orientations:
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Enhance products’ quality to meet international standards
 Invest in modern machinery and equipment and apply new technology such as vertically
integrated value chain, galvanizing line (NOF technology), color coating line and manufacture
steel pipes in accordance with the most world leading technology.
 Control products’ quality in accordance with international standards, appoint Japanese Expert
as Quality Director of Corporation
 Apply ISO 9001 – 2008 standards of quality management system, ISO 14000 standards of
environment management system, OHSAS 18000 standards of occupational health and safety
advisory services.
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Decrease price
 Implement solutions of reducing expenses such as checking, completing production norm,
consumptive norm of raw materials and improving technique
 Implement policy of purchasing raw materials and reasonable inventory policy
 Promote core competitive advantage which is vertically integrated value chain
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Upgrade Hoa Sen brand name from National Brand Name to International Brand Name through:
 Creating products with high quality and most competitive price
 Rapid and punctual delivery
 Good after – sales policy
 Strengthen the domestic and foreign promotion of brand name
Above are Hoa Sen Group’s answers to Shareholders’ questions at Annual Shareholders’ Meeting on
March 06th, 2013.
On behalf of the Board of Directors, we wish all of you health, happiness and success.
Thanks and Best regards,
Member of the Board of Directors
Head of Investor Relation Sub – committee
(Signed)
PHAM GIA TUAN