New fund management company launches

Tuesday, May 20, 2008
The Chien Thang Fund Management Company (Victoria Capital) officially opened in Hanoi on May 20. The company plans to focus operations on companies and projects in real estate, cement, beverage and pharmaceutical industries.

To commemorate its opening, Victoria Capital signed cooperation agreements with LR Global Partners of the US , the Hong Kong and Shanghai Banking Corporation (HSBC) and the Oil and Gas Securities Joint Stock Company.

The company had earlier signed a comprehensive cooperation agreement with the Post Insurance Joint Stock Company.

Victoria Capital was granted its license last December with a legal capital of 28 billion VND (1.75 million USD).

The company is now investing in Thanh Son Cement and Thang Long Beer Factory and Paragon Building.

More VIC and ICF shares for HOSE

Tuesday, May 20, 2008
The Ho Chi Minh City Stock Exchange (HOSE) has given the green light to companies to list about 41 million additional VIC and ICF shares.

Nearly 40 million shares of Vincom Joint Stock Company, coded VIC, will be listed.

The shares will be issued to current shareholders in 2008 to increase the company’s chartered capital from VND 800 billion to VND 1,200 billion.

More than 1 million shares will be offered by the Seafood Investment and Commerce Joint Stock Company, coded as ICF, to strategic shareholders.

These additional shares will strengthen the supply source of HOSE but raise a concern about bigger gap between supply and demand when the VN-Index is seeing sharp drops. (TBKTVN)

Foreigners Net Buyers Of VND19.3 Billion Of Shares

Tuesday, May 20, 2008
Foreign investors were net buyers of VND19.3 billion ($1.2 million) of Vietnamese stocks Tuesday, out of a total of VND94.8 billion traded, the Ho Chi Minh Securities Trading Center said.
Volume traded totaled 2.6 million shares, with foreigners accounting for 28.9% , according to the stock market operator. (Dow Jones)

Extending the time period for IPO auctions could hold businesses back

Tuesday, May 20, 2008
The slow progress in equitising state owned enterprises (SOEs) is attributed to many reasons such as uncoordinated procedures, cumbersome administrative formalities, and bad debts. Many people say that the current situation on the stock market is not favourable for SOE to equitise and issue Initial Public Offerings (IPO).

Order of Preference for IPO

Professor, Dr. Nguyen Dang Nam, Chairman of the Financial Institutes Council said it is necessary to re-consider extending the time period for IPO auctions of prestigious enterprises, especially as they are thirsty for capital.

Mr Nam said it is necessary to conduct the IPO auctions and the equitisation process of prestigious enterprises at the right time. More importantly, when enterprises select strategic investors and accurately evaluate the value of shares, investors will get involved. Moreover, enterprises should provide investors with clear information about their activities and have trust in their plans after the equitisation process.

Mr Dao Van Hung, Chairman of the Management Board of the Electricity of Vietnam (EVN) said the group wants to have IPO auctions to increase its capital for production activities, as it is difficult for it to borrow capital from banks with the high interest rates.

Currently, EVN is investing in building 25 power plants with a total funding of VND150,000 billion. The electricity sector has proposed the continued implementation of the equitisation process of power companies, as this will entice many investors to get more involved in the sector and improve transparency and the management efficiency.

To meet the demands for IPO auctions by some enterprises, economic expert Le Dang Doanh also said that some national major power projects should be considered as top priorities and brought on to the trading floor of the securities market as the electricity sector is now in need of massive amounts of capital to overcome the shortage of power.

According to Mr Nam, businesses should set a time for launching their IPO auctions in line with their own circumstances. The Government has made the right decision to allow business to extend the time until launching IPO auctions. However, those enterprises who are effective in business should not be allowed to postpone their IPO issuance as it could slow down the equitisation process.

Giving the right of self-determination to businesses

The slowdown of the equitisation process is partially attributed to inflation and recent fluctuations in the stock market. Maybe, the equitisation process should wait until the stock market picks up again.

Nguyen Duc Tang, deputy head of the Business Financial Department under the Ministry of Finance, said that in some people’s opinion, businesses’ IPO must bring in a higher value than their initial denominations. This view has distorted the reality of IPO issuance and the equitisation process. Businesses should launch IPO auctions based on their real assets and provide transparent information in order to ensure the legitimate rights of shareholders and attract more investors, he added.

According to economists, in the current context of the falling stock market, preventing new business from issuing IPO will have a negative impact on the market. Enterprises should be encouraged to participate in the market to create a balance between supply and demand. If investors do not want to purchase shares of listed companies and new businesses are not allowed to launch IPO auctions, the stock market will be less attractive.

Le Dang Doanh affirmed that the stock market must follow market principles, including supply-demand and competition. Enterprises should have the right to launch their IPO auctions in line with their business strategies. They have to take responsibility for their listed shares and monitor the supply and demand fluctuations on the market.

Mr Doanh said that the Government hopes to sell shares of State-owned enterprises at the highest price. It is unnecessary for the Government to use administrative mechanisms to intervene in the market’s supply and demand laws because this type of intervention will not benefit enterprises, he stressed.

Economists have said that if the time for IPO issuance is extended to save the stock market, this administrative measure should only be used for a short period of time. As scheduled, IPO issuance and the equitisation process should be completed by 20 big corporations and nearly 400 businesses by 2010. The most important issue is to accurately appraise the assets that a business has. (VOV)

Listed companies’ profit: either increase sharply or drop dramatically

Tuesday, May 20, 2008
The business plans for 2008 released recently by listed and public companies showed two clear tendencies: either the companies will see considerable profit increases, or sharp profit decreases.

The companies which will see profit drop compared to last year are the companies operating in the field of securities or that have financial investments. Two leading securities companies, Saigon Securities Incorporated (SSI) and Bao Viet Securities, have reduced profit goals.

SSI has the targeted profit in 2008 equal to a half of 2007’s level, while Bao Viet has set the modest profit of VND158bil, lower than 2007’s profit of VND240bil. Some other securities companies are considering lowering profit targets to adapt to the current circumstances.

A lot of companies which made financial investments have been suffering from the falls of the stock market. The Refrigerator Engineering Enterprises (REE), for example, got profit in the last three months of the year from its traditional business. However, as it had to make provisions for financial investments, its finance report said that it incurred the loss of over VND100bil.

Savico Company, which has financial and real estate investments, had to lower its targeted profit from VND120bil to VND80bil in 2008. SAM, the share name of Sacom, a cable and telecom equipment company, has fallen out of favour with investors, as the company reportedly has big investments in other companies. If considering the market prices of these shares, most of the financial investment proves to be unprofitable, including the investment in Alphanam.

While these companies which have financial investments are expected to suffer losses from the falling stock prices, manufacturing companies are expected to gain big profit this year.

According to the Analysis Division under VP Bank’s Securities Company, companies operating in fields which have seen both input and output price increases earned high profit in the first quarter of 2008. These include Phu My Fertiliser and Dong Phu Rubber.

The group of real estate shares can be divided into two sub-groups. The first one, the construction and accommodation development companies, will suffer due to the higher prices of construction materials and the frozen real estate market. Meanwhile, industrial park developers will have stable turnover and profit thanks to increased foreign investment.

Analysts say that companies making products which are input materials for other industries will have very high profit growth.

The Thu Duc Import Export Trade Company, specialising in distributing steel, got the fat profit of VND11bil in Q1, an increase of 42.9% over the fourth quarter of 2007, fulfilling 64% of 2008’s plan, thanks to the sharp steel price increases.

Similarly, DIC Trade and Investment Company had the turnover of VND170bil for the first four months of the year and pre-tax profit of VND9.5bil, up by 288% over the same period of 2007.

According to Dau tu chung khoan newspaper, specialising in stock analysis, in the first quarter of 2008 most of the companies that maintained stable profit have chartered capital of under VND50bil.

Most of the companies that issued shares to increase chartered capital in 2006 and 2007 have made financial investments, since their production has not absorbed all their mobilised capital. Some cautious companies did not inject money in stocks, but chose a safer investment way by making deposits at banks. (DTCK)