Vietnam Manufacturing and Export Processing (Holdings) Limited Announces Major Land Use Rights Transfer in Vietnam

Key Highlights of the Transaction

• Major Transaction: Vietnam Manufacturing and Export Processing (Holdings) Limited (“VMEP” or “the Company”) has executed a significant asset disposal involving the transfer of land use rights for two industrial parcels in Bien Hoa City, Dong Nai Province, Vietnam, along with associated appurtenances, to Ho Nai Industrial Park Joint Stock Company (“Ho Nai”).
• Aggregate Consideration: The total consideration for the transaction is VND385,000,000,000 (approximately HK\$113,721,300), inclusive of value-added tax.
• Nature of Assets:
  • Land Parcel 1: 182,772.8 sq. m. in Phuoc Tan Ward, Bien Hoa City, for industrial park use. Leased by VMEP from the Vietnamese government, with rights expiring 25 March 2042.
  • Land Parcel 2: 117,241.2 sq. m. in Long Binh Ward, Bien Hoa City, also for industrial use and under government lease expiring 25 March 2042.
  • Appurtenances: Privately owned R&D center, design building, testing room, garage, equipment room, gas station, and other support facilities.
• Shareholder Approval: The transaction was approved by written consent from SY International Ltd. (“SYI”), which holds 67.07% of the Company’s shares. No general meeting will be convened as no shareholder is required to abstain and the controlling shareholder has approved the deal.

Transaction Structure and Terms

• Payment Schedule:
  1. First instalment: VND77,000,000,000 (20%) within seven business days of signing.
  2. Second instalment: VND231,000,000,000 (60%) after notarisation of transfer agreements.
  3. Third instalment: VND77,000,000,000 (20%) deposited into a transaction account, released upon reissuance of land use certificates to Ho Nai.
• Completion: Finalised within six months of the principal agreement, subject to government reissuance of land use rights. The transfer was completed on 22 December 2025.
• Post-Completion Use: VMEP is entitled to continue using a portion (~20,000 sq. m.) of Land Parcel 1, including the test factory (12,835 sq. m.), for 24 months rent-free to facilitate relocation.

Valuation and Financial Impact

• Updated Independent Valuation: The final valuation as of 22 December 2025 (by SVVN Price Valuation Co., Ltd.) is VND167,961,000,000 (approx. HK\$49,612,320, VAT exclusive). The consideration is significantly above this valuation due to competitive offers, strategic value, and negotiation dynamics.
• Carrying Amount: The assets had a book value of VND85,418,376,468 (approx. HK\$25,230,880) as at 30 September 2025.
• Expected Gain: The Company expects to recognise an unaudited pre-tax net gain of VND264,832,059,657 (approx. HK\$78,226,094), calculated as the net compensation less the carrying amount and transaction costs.
• Use of Proceeds: The proceeds will be used as general working capital.

Strategic and Operational Rationale

• Policy changes in Vietnam have resulted in the redesignation of the land for industrial park development, now under Ho Nai’s development rights. Retaining the land would expose VMEP to high infrastructure usage costs and operational risks.
• The transaction mitigates these risks, secures fair compensation, and allows for efficient resource reallocation.
• VMEP plans to relocate its R&D facilities to Nhon Trach Industrial Zone II, Dong Nai Province. Relocation costs are estimated at VND79,322,000,000 (approx. HK\$23,430,132), which are expected to be covered by the transaction proceeds.

Valuation Methodology and Assumptions

• The valuation was performed using the Direct Comparison Approach, a widely accepted method for industrial assets in Vietnam. Key assumptions include no changes in planning, full utility servicing, no environmental issues, and the assets being free from encumbrances.
• The valuation considered only the lessee’s interest and the depreciated replacement cost of improvements, with market adjustments reflecting limited utilisation and market conditions.

Listing Rules Implications

• The transaction is classified as a “major transaction” under Chapter 14 of the Hong Kong Listing Rules due to its size (percentage ratios exceed 25% but are below 75%).
• Shareholder approval has been obtained via written consent by the controlling shareholder, SYI. No general meeting will be held.

Potential Share Price Impact and Investor Considerations

• Significant Profit Realisation: The transaction results in a substantial one-off gain, enhancing the Company’s financial position and providing flexibility for future investments or operations.
• Simplification of Asset Base: The sale of non-core, underutilised or strategically complicated assets is likely to be viewed favourably by the market, especially given the risks and costs associated with maintaining the land under new policy conditions.
• Efficient Capital Reallocation: Proceeds will be used for general working capital and to cover relocation, supporting ongoing operations and potentially reducing financial risk.
• Market Valuation Premium: The agreed consideration is well above the latest independent valuation, reflecting strong negotiation outcomes for VMEP and possibly a premium for early exit or strategic value to Ho Nai.
• Minimal Disruption: The Company has secured a two-year rent-free transition period for critical R&D operations, minimising operational disruption and cost impact.
• Regulatory Clarity: All necessary approvals are in place, and no shareholder or connected person is required to abstain from voting.

Other Notable Disclosures

• No material adverse changes in the Group’s financial or trading position since 31 December 2024, except for the positive profit alert announced on 13 February 2026.
• No material litigation, loan arrangements, or competing business interests were identified.
• The transaction and valuation have been conducted by independent parties with no conflicting interests.

What Shareholders Should Watch For

• This transaction could be a catalyst for the Company’s share price due to the immediate gain recognition, improved capital structure, and de-risking of its asset base.
• Investors should monitor how efficiently VMEP manages the relocation and deployment of the proceeds in its core business.
• The strong negotiation premium may set a positive precedent for future asset disposals or negotiations with authorities and partners.
• Risks remain around the successful relocation of R&D functions and the use of proceeds, but the Board has stated that the relocation costs are manageable and the transition plan is in place.

Disclaimer: This article summarises and interprets a major transaction circular issued by Vietnam Manufacturing and Export Processing (Holdings) Limited for investor information purposes only. It does not constitute investment advice, and investors should consult the original documents and their own advisers before making investment decisions. The Company’s future performance and share price are subject to market risks, regulatory changes, and operational execution.

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