SMC targets profit recovery by mid-2027

The timing is important for investors because a turnaround story is only credible when the balance sheet starts to heal before the income statement does. SMC said the restructuring is now supported by additional partners and that the process, originally expected to take two years across 2026-2027, may be tracking toward a more visible inflection point around the middle of 2027. If management can deliver core profit by then, it would also reduce the market’s focus on whether the company is surviving mainly through disposals, a distinction that has weighed heavily on valuation and lender confidence.

Shareholders also approved a plan to issue shares to swap as much as 272 billion dong of debt, underscoring how central liability management remains to the turnaround. The debt-for-equity exchange should ease cash strain and cut financial expense, but it also raises dilution risk for existing shareholders, which means the market will likely judge the move on whether it accelerates a cleaner capital structure rather than simply postponing the next repair job.

SMC is pairing that financial restructuring with a broader effort to monetize and redeploy assets. The company won shareholder approval to add real estate to its business lines, saying it has accumulated significant land, factories and equipment over 38 years of operation and wants more legal flexibility to lease and manage them. Management said it is negotiating with potential partners to exploit those assets and expects to sign some contracts this year. It is also building out more manufacturing capacity at a 9.7-hectare processing site in Phu My.

The company is trying to solve another accounting and liquidity issue at the same time. Management said the gap between current liabilities and current assets is about 1 trillion dong, largely tied to Novaland properties that were moved from receivables to long-term investments. Chairman Pham said that once SMC is licensed to operate in property, those assets could in principle be reclassified into inventories, helping narrow the working-capital mismatch and reducing pressure around concerns over going-concern risk. That explanation will be watched closely by auditors and investors alike, because any accounting remedy must still be matched by economic cash generation.

For investors, the bull case is straightforward: if SMC can combine debt reduction, asset monetization and steadier industrial demand, it could re-rate from a distressed restructuring name into a more ordinary steel distributor tied to Vietnam’s manufacturing and foreign-invested supply chains. The company said it already supplies steel to Samsung, Aqua and other FDI customers, and it expects to complete IATF 16949 certification in the fourth quarter to deepen its role in the auto-supply chain. That gives it a more strategic pitch than simple trading margins.

The bear case is that the turnaround remains dependent on execution, asset sales and accounting improvements before the core business is fully repaired. Steel distribution is cyclical, margins are thin, and any delay in capital raising, debt conversion or property-related transactions would keep pressure on liquidity. SMC’s shares closed at 34,050 dong on Sept. 11, near their recent highs, suggesting some optimism is already priced in. The next catalysts are the capital increase expected by late September or early October, further debt-swap details and whether the company can translate restructuring progress into sustained operating profit before mid-2027.