SDA to pay dividend in shares

Friday, May 2, 2008
Simco Song Da Joint Stock Co (SDA) recently passed the plan to offer 3.5 million shares to hike its chartered capital from the current of 70 billion dong to 105 billion dong.

Of which, 700,000 shares will be offered to pay for the 10% dividend for the second phase of 2007, 1.4 million bonus shares will be allocated to the existing shareholders at the ratio of one new share for five shares held and the remaining 1.4 million shares will be sold to the strategic shareholders at the offering price of 10,000 dong per share.

The capital being mobilised from the shares issue will be invested in Phung Hiep industrial zone project valued at 23 billion dong in Ha Tay province's Thuong Tin District and 12 billion dong in Dak Doa Hydropower Joint Stock Co.

Last year, SDA made a revenue of 121.8 billion dong, 32.17 billion dong from pre tax profit and plans to pay 2007 dividend of 20% that could be 200.6 billion dong, 37.2 billion dong and 20% this year respectively.

Lam Dong foodstuff firm to double chartered capital

Friday, May 2, 2008
Lam Dong Foodstuff Joint Stock Co (coded VDL) plans to double its chartered capital from the current of 12 billion dong to 24 billion dong through offering 1.2 million shares.

In particular, 900,000 shares will be offered to the existing shareholders at the ratio of 75 new shares for 100 shares held at the price of 18,000 dong per share, 60,000 shares sold to the company's employees at 25,000 dong per share and the remaining 240,000 shares allocated to strategic partners at the price equalling to 80% of average trading price of five consecutive trading sessions on the Hanoi Securities Trading Center (HaSTC) before the share issuing date.

Last year, VDL posted 151.845 billion dong in revenue and 9.223 billion dong from pre tax profit.

This year, the company plans to bring 175 billion dong in revenue, over nine billion dong from pre tax profit and pay 18% dividend.

Seeking ways out of stock market slumber

Friday, May 2, 2008
Viet Nam's stock market has unexpectedly gone ups and downs over the last year. The market has prevailingly witnessed downward corrections, especially since the start of this year. VN Index by April 23 dropped to 523.25 points, down by 40.8% against the lowest level in 2007, down by 73.2% against the highest level and down by 55% against the average level.

Commercial banks had ever reported the highest securities loans of up to 20 trillion dong, accounting for some 1% of their total assets worth 200,000 trillion dong. Currently, total securities loans at commercial banks was only about 9-10 trillion dong or 0.5% of total assets of banks because banks have been striving to collect securities debts, which has made the stock market further slash. According to PhD. Le Xuan Nghia, director of the central bank's banking development strategy department, the ratio of securities loans is not high.

Meanwhile, the government has instructed the central bank to offer discount loans with an interest rate of 9% a year when commercial banks are temporarily short of liquidity. After the stock market had continuously increased mainly because of the narrowed trading band, the market has constantly slashed due to the expanded trading band. Many shares have been offered for sales at floor prices right after the trading band is expanded. It is reasonable for investors to worry over banks' further lifting share-mortgaged loans. Particularly, when banks are meeting with difficulties in raising deposits, without lifting share-mortgaged loans, banks will be vulnerable to high risks. Meanwhile, investors have no money to supplement for securities deposit. If investors borrow capital from banks, they will have to accept high interest rates. However, if investors sell shares, they will loose all. Six months ago, investors could borrow 60 million dong if they mortgaged 1,000 REE shares worth 150 million dong. No-one could think that the price of REE shares was now only 52,000 dong a share.

Over the last time, prices of a series of blue-chips such as REE, SAM, GMD, FPT, SSI and so on, which have been most mortgaged, went down to unexpected levels, making VN Index continuously slash.

In fact, if hundreds of residents, who mortgage their land-use right and house ownership certificates to borrow loans from banks to invest into production or business activities, cannot pay debts due to their business or production failure, banks will find hard to collect debts or lift mortgage because banks cannot ask debtors to go out their houses. However as for securities mortgage, banks will be able to sell shares mortgaged by hundreds of investors at floor prices.

Nevertheless, in order to prevent a wave of lifting share mortgages, the central bank must take actions to intervene into such a move instead of offering banks discount loans with an interest rate of 9% a year. The central bank will use the discount loans to extend due securities mortgage contracts or repo. Commercial banks borrow capital from the central bank with an interest rate of 9% a year, and then extend contracts for investors with an interest rate of 12% a year or less. Investors, after suffering from heavy losses for some months, will feel secured partly with a preferential interest rate. With the current outstanding securities loans, if share-mortgaged loans in the OTC is deducted, the amount of money that the central bank lends is not big.

If several years ago investors found hard to seek information about companies, the domestic and foreign stock markets, now they are facing up massive information from different sources such as TV, internet, newspapers, which make investors feel confused. As a result, investors have recently sold both good and bad shares and VN Index topped among decliners in the world. Meanwhile, the US Stock Exchange amidst the economic recession time has seen little reduction. Namely, Dow Jones Index dropped by only 1,300 points or 10% against the highest level of 14,000 points. (DTCK)

La Nga sugar plant chairman burnt by securities

Friday, May 2, 2008
Shareholders of the Dong Nai-based La Nga Sugar Company on April 29 signed a petition which was filed with the Ministry of Agriculture and Rural Development, the Steering Committee on Fighting Corruption, and the Ministry of Finance to report about illegal activities of Pham Nhu Hoa, Chairman of the La Nga Sugar Company.

The shareholders said that as the Chairman of the Management Board of La Nga Sugar Company, Hoa used VND16.84bil of the company to play the stock market. However, as the market has been falling, Hoa asked for a delay to pay his debts, promising to pay debts by the end of 2008.

It is now the time for La Nga Sugar Company to organise the 2008 annual shareholders’ meeting. However, the meeting has been cancelled due to the scandal.

The stock trade affair by the chairman of La Nga Sugar Company was exposed when the company on April 9 sent a letter to its shareholders to attend the 2008 annual shareholders’ meeting, expected to take place on April 22. However, several days later, Hoa released a notice on postponing the meeting. A lot of shareholders demanded an explanation from the company and they did not receive legitimate reasons.

On April 18, the company’s management board organised a meeting during which participants heard Hoa admit using that sum of money to purchase stocks in his name.

Le Tai Anh, Chief Accountant of La Nga Sugar Company, said that Hoa has violated the current regulations in using the company’s money for private business. However, he said that his behaviour should be sympathised with.

However, the company’s shareholders do not agree with Anh, saying that Hoa’s behaviour violates the current financial laws and deceived shareholders. The shareholders have asked to know who lent a hand to Hoa in the stock trade deal.

Moreover, the shareholders also said that they had heard about many dubious affairs in the company. For example, the La Nga Company has been renting a confectionary production line to the Northern Food Corporation at VND230mil a year. However, it remains unclear how the money from the rent has been used. (Tuoi tre)

Vinatex may fall short of targets

Friday, May 2, 2008
Viet Nam Garment and Textile-Group (Vinatex) may not meet its targets this year because of the rising price of raw materials, according to its chairman, Le Quoc An.

Rising production costs are hurting textile and garment enterprises, especially the dramatic increases in coal, oil and petroleum.

And the price of raw materials, such as cotton and other fibres, has also increased by an average of 20%.

According to a recent Vinatex survey, so far this year, rising fibre prices have lifted production costs by VND40bil (US$2.5mil). Cotton prices alone are costing the firm additional VND284bil ($18mil). Another VND50bil ($3mil) is lost to high petroleum and coal prices.

Altogether, these increases will push Vinatex production costs up by an additional VND800bil, said An.

To deal with the high prices, Vinatex is trying to cut down on costs while boosting labour productivity. An said it was necessary to use more domestic materials and limit production losses to 5-10%.

Despite the challenges, Vinatex still wants to expand through selecting investment projects and expanding its export market. It is also considering investing VND11.39tril ($712mil) this year on expansion.

The group will spend more than $344mil to expand production and more than $318mil in industrial-zone and property-development projects.

The country's textile sector as a whole earned nearly $7.8bil in export turnover last year. The sector is expected to make $9.5bil in 2008.

New raw material source

Vinatex has recently set up the Viet Nam Textile Materials Production and Trading Joint Stock company (VinatexMat) with a charter capital of $12.5mil.

The establishment of VinatexMat, which specialises in producing and trading raw textile materials, is aimed at creating a source of raw materials for the nation's textile and garment sector.

To boost the sector and national development, the company has also co-operated with Binh Thuan Province to create zones for cultivating raw materials. (Viet Nam News)

Listed companies in good health: VAFI

Friday, May 2, 2008
A quick survey by the Viet Nam Association of Financial Investors (VAFI) showed that listed companies are operating well despite big difficulties. The association, therefore, has suggested informing investors soon about the good business performances of listed companies to calm them down.

According to Nguyen Hoang Hai, Secretary General of the Vietnam Association of Financial Investors (VAFI), the shocking monetary policy the State Bank of Vietnam has been following recently has had big influences on the stock market and businesses.

In this circumstance, speculators have spread rumours about the poor operations of businesses. The difficulties have been exaggerated to make it seem as though Vietnam was facing an economic crisis.

However, the recent survey by VAFI of some listed companies in the fields of banking, insurance, construction and real estate, transportation, rubber and pharmaceuticals showed that the companies are still maintaining the high growth rates recorded during the fourth quarter of 2007.

Construction companies are facing temporary difficulties. However, right from 2005, they all anticipated the difficulties they would face and price increases, and they all have had the plans to deal with the problems.

Hai said that in such a situation, securities investors may want to know about the ‘health’ of listed companies in the first quarter of 2008 sooner than usual. Therefore, according to him, listed companies should release their business results from the first quarter as soon as possible.

When asked if any mistakes could occur if listed companies announced business results early, Hai said that in order to avoid mistakes, listed companies could release figures equal to or lower than the actual figures. Moreover, listed companies should provide investors with reports which interpret how the inflation has affected their business performance.

Hai called the early announcement an effective measure to help recover the stock market.

Another measure Hai thinks listed companies should take is having their management boards buy more of their companies’ shares while limiting selling shares.

In fact, in the last time, some management boards of listed companies did try to buy shares of their companies, which helped calm investors down.

“The share purchase of management board members shows the responsibility of companies’ managers towards their shareholders,” Hai said. (Tien phong)

Making money produces more money

Friday, May 2, 2008
Only gold and real estate now can bring positive real interest rates to investors. However, securities deserve to be the investment channel for the long term.

Currently, only gold and real estate can bring positive real interest rates to investors, because the profit these investments can bring is higher than the inflation rate (the real profit for gold investment is 8.5% while real estate 0.7%).

Meanwhile, other investment channels are bringing negative profit. Deposits, for example, have the nominal interest rate of 3%; however, the actual interest rate would be minus if considering the high consumer price index (103%: 109.19% = 94.33%), which means depositors are suffering the actual loss of 5.67% (100% - 94.3% = 5.67%).

As for US dollars and securities, both the nominal and actual profits are negative.

The US$ price by the end of March 2008 had decreased by 1.88% over December 2007, which meant the nominal loss of 1.88%. However, as the consumer price increased by 9.19% during that time, the actual loss US$ investors suffered is even bigger, at 10.14% (98.12%: 109.19% = 89.86% or 100% - 89.86% = 10.14%).

How about investments in securities? The VN Index on March 31, 2008 was 516.85 points, and on December 28, 2007 (the last trading session of 2007) was 927.02 points. This means that the VN Index on March 31 was 55.75% of that on December 28, 2007, or the nominal loss of 44.25%. However, if counting the loss due to the higher consumer price, the actual loss would be higher, at 48.94% (55.75%: 109.19% = 51.06% or 100% - 51.06% = 48.94%).

Three scenarios of CPI

If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last 16 years (3.52%), the CPI increase will be over 13% for the whole year of 2008.

If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last three years, 2005, 2006 and 2007 (4.17%), the CPI increase will be over 13.7% for 2008.

If the CPI increase in the last nine months of the year is equal to the average CPI increase in the last nine months of the last four years 2004-2007 (5.46%), the CPI increase will be 15.2%.

The third scenario seems the most likely. Some experts have even forecast higher inflation rates.

Which investment channels, then?

Though deposits have been bringing negative interest, people will still choose this investment channels thanks to its safety. Making deposits to get positive nominal profit and negative actual profit proves to be a better choice than other investment channels, which have both the nominal and actual profit negative.

Gold deserves to be not only the ‘safe shelter’ in the context of high inflation, but an attractive investment channel. The gold price is forecast to see further increases, since domestic prices are close to the world’s price, which is believed will escalate as a result of the US cutting US$ interest rates to deal with its economic recession.

The US dollar, which was once the No 1 choice of many investors, has become less attractive in the eyes of investors as the dollar has been devaluating against other hard foreign currencies like the euro, pound and Japanese yen. It is wiser to invest in non-dollar currencies instead of relying on the US dollar.

Securities have attracted 300,000 investors with 288 listed companies and the total market capitalisation value of VND315tril. As the VN Index has been falling since the beginning of the year, securities investors have turned their backs on the bourse.

However, some analysts have forecast that the VN Index will rebound to hit the 600 point threshold by the end of this year, an increase of 15%. And if the forecast becomes true, securities investments will bring more profit than deposits.

The real estate market witnessed three fevers (the first one occurred in 1993-1994, the second in 2001-2002 and the third in late 2007, early 2008) before falling now. The tightened monetary policy and the overly high construction material prices both have made real estate prices increase and real estate demand decrease.

However, analysts believe that in the long term, real estate will still be the right investment channel to inject money in. The rapid urbanisation, the policies on allowing Viet Kieu and foreigners to buy homes in Vietnam will make real estate prices increase further. However, the profit from real estate investments will not be high due to the policies on limiting construction areas and tax policies (tentative progressive tax, which aims to limit speculation, and personal income tax). (TBKTSG)

Military Bank’s profits hit 15 million USD

Friday, May 2, 2008
The Military Commercial Joint Stock Bank’s profits for the first quarter of the year have reached 240 billion VND (15 million USD), 31.2% of its target for the year.
By the end of March, the bank’s deposits totalled more than 23.21 trillion VND (1.45 billion USD) while outstanding loans reached 13.1 trillion VND (813.44 million USD).

VAFI: listed firms should buy back more shares

Friday, May 2, 2008
Viet Nam Association of Financial Investors (VAFI) has called for more efforts from listed companies to buy back shares to help stabilise the stock market.

The association explained that buyback schemes implemented on a large scale should help calm down investors because buybacks show the responsibility company managers take for their stockholders.

The association also suggested that listed firms release business results in the first quarter of 2008 as soon as possible, to help quash rumours on the exchange.

“Almost all of the listed firms performed well in this quarter as we surveyed, despite the difficult times the economy is going through. The sooner the firms release their balance sheets, the better shares will get.”

VAFI also suggested that performance should consider the impact of inflation towards its business activities. (VNA)

Back to work: will the long holiday help rally investors?

Friday, May 2, 2008
The early week rebound of the VN-Index should spring investors into a rally next week after the long public holiday.

On Tuesday, a day before the holiday and the last session in April, the VN-Index rose slightly by 0.57% to 522.36.

Nearly 10 million shares changing hands brought in a turnover of VND415.79 billion (US$25.99 million).

Local investors demonstrated better investment behaviour on Monday and Tuesday, evident in the balanced volume of shares bought and sold.

According to the analysis department of Viet Nam International Securities, investors were active buyers because they wanted to preserve good stocks for new investments next month after the holiday.

"Meanwhile, others see the rally as a good chance to earn some money for the holidays. Then they continued selling shares," the department said.

Foreigners maintained their strong presence, buying a net 2.61 million shares on Tuesday. Foreign activity posted a revenue of VND149.59 billion ($9.35 million).

Consumer goods, pharmaceuticals and petroleum stocks were the most popular, while financial and property stocks seemed to be sliding.

"When the inflation rate is still high, sectors like petroleum or pharmaceuticals are important in daily life. Those shares are more likely to bring investors profit," said Dao Van Khanh, an analyst from Agribank Securities.

While banking or property stocks proved attractive for investors, Khanh noted, "it’s not a good time to trade those stocks daily. It’s better to have a long term and specific investment plan with those shares."

STB of Sacombank was the most traded code on Tuesday with 1.77 million shares.

As gold and oil prices on the world market signalled stability, local market regulators were working hard to stabilise the market as the VN-Index passed the 500-point mark.

"That good news could make investors optimistic in their trading next week. However, it’s hard to say how long the optimism will last," Khanh said.

In Ha Noi, the HASTC-Index on Tuesday slid 1.17% at 169.11. Trading turnover was VND112.59 billion ($7.04 million) for 3.25 million shares.

The foreign sector was also a net buyer in this market with 58,800 shares, posting a turnover of VND2.17 billion ($135,625). The market resumes trading on Monday. (VNS)