Vietnam’s blue chips fall faster than stock market plunge

By Minh Son   November 24, 2018 | 05:46 pm PT
Vietnam’s blue chips fall faster than stock market plunge
A person rides pass the Hanoi Stock Exchange in Hanoi, Vietnam. Photo by Reuters/Kham
As business results fall short of targets, Vietnamese blue chips are falling faster than the stock market’s continued plunge.

Vietnam’s benchmark VN-Index dropped 23.5 percent to 917.97 points on Friday from its April peak over 1,200 points. In corresponding comparison, the fall in value of blue chips stocks has been more than twice as high.

A share of Vietnam’s leading stone manufacturer Vicostone (VCS) on Friday was worth VND75,000 ($3.2), down 47 percent from its peak on April 4 at VND141,600 ($6.06).

Analysts at that time called the stock a "phenomenon," as its value surged 50 times from VND3,000 (13 cents) in mid-2014 on the Hanoi Stock Exchange (HNX).

Vicostone’s profits also rose over 50 percent a year from 2014 to 2017, while its revenue increased from VND2 trillion ($85.64 million) to VND4.35 trillion ($186.27 million) in the same period.

But this year, maintaining double-digit growth seems to be a challenge for the company as its revenue has stayed the same year-on-year at VND3.2 trillion ($137 million), while net profit fell 7 percent to VND790 billion ($33.82 million) in the first nine months of this year.

Although the company has reassured shareholders that business is normal and that Vicostone plans to buy its own shares to stop the falling momentum, investors have been selling their holdings at increasing speeds.

A similar situation can be seen at the Vietnam Prosperity Joint-Stock Commercial Bank (VPBank). Its stocks on Friday morning closed at VND21,950 (94 cents), dropping 48.7 percent from its peak on April 9 at VND42,826 ($1.83).

Last year, as it focused specifically on consumer finance, the bank’s stocks was one of the most sought-after when it was listed on the Ho Chi Minh City Stock Exchange (HOSE) in August.

But its stocks value has been dropping this year because business results are not as expected, analysts say.

The company gained a consolidated net profit of VND4.9 trillion ($209.82 million) in the first nine months, up nearly 9 percent year-on-year, but only 60 percent of the year’s target.

Securities firm Viet Capital Securities (VCSC) said in its recent report that the bank is not likely to meet targets set earlier this year. It said its own forecast on VPBank’s profit and stock prices for the year could be revised downwards 15-20 percent.

Major plastic stocks are also falling in value.

Binh Minh Plastic (BMP) and Tien Phong Plastic (NTP), the country's two leading plastic producers, had their stock values plunge 50 percent from their peak last year.

The two companies recorded high growth from 2010-2016. Binh Minh Plastic’s revenues went up from VND1.4 trillion ($59.95 million) to almost VND3.7 trillion ($158.43 million), with gross margin going up to nearly 30 percent.

In the same period, Tien Phong Plastics also doubled their revenue and had its gross margin rise to almost 36 percent.

Both companies were able to achieve this growth thanks to cheap materials and continual expansion.

But as investors started to lose faith in the potential of the plastic industry and the entrance of foreign companies along with higher material costs, the plastic manufacturers had to reduce their profit margins.

Last year, Binh Minh Plastic’s gross margin dropped to below 23 percent, while that of Tien Phong Plastic fell to 33 percent.

Other stocks in the country have also fallen. The HNX-Index on the Hanoi Stock Exchange on Friday closed at 104.271 points, down 24.4 percent from its peak in April.

The UPCoM-Index for unlisted companies on Friday closed at 51.872 points, 16 percent lower from its peak in March.

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