Absence of strong businesses on stock market

SGI

The numbers in newly listed enterprises in the first months of 2019 have plummeted sharply in contrast to the period 2017-2018. The reason that businesses are afraid to put stocks on the floor is due to the current stock market movement that is not as per expectations in terms of both score and liquidity.

The investors expect the big names such as Vietnam Rubber Group-Joint Stock Company (GVR) to be listed.

The investors expect the big names such as Vietnam Rubber Group-Joint Stock Company (GVR) to be listed.

Lack of hot businesses

According to statistics, from the beginning of 2019 until now, only ten enterprises went on HOSE, nine enterprises went on HNX and 45 enterprises went on UPCoM. Businesses joining the number of listed companies on the floor have decreased sharply and specifically, from the beginning of 2019 until now, HNX has only welcomed nine more listed companies, while 16 enterprises were compulsory cancelled or cancelled to change floors. These are quite low numbers compared to the time of the boom in 2017-2018. In 2018, there were 33 businesses on HOSE, 22 businesses on HNX and 268 businesses on UPCoM.

It is worth mentioning that the number of newly listed enterprises was not many in numbers and lack strong appeal. The new listed company that is most noticeable to date is Vietnam Television Cable Corporation (CAB), which is listed at a price of VND 140,900 per share. However, this enterprise chose UPCoM, not HOSE or HNX. In fact, only UPCoM has many newly listed enterprises, while most enterprises on HOSE and HNX transferred floors.

Most unfortunate is the noticeable absence of banks, although previously determined to list stock on the floor in 2019, An Binh Commercial Joint Stock Bank (ABBank), Nam A Commercial Joint Stock Bank (Nam A Bank), and Orient Commercial Joint Stock Bank (OCB) are missing. Up to now, only Ban Viet Bank (BVB) has brought shares to UPCoM, but it has not created the attention of investors, because this is a weak bank and this bank itself listed its shares without any fanfare.

Many risks

Explaining the reasons for this slow listing, one bank leader shared that the bank had plans to raise capital from a strategic investor and only after that will list stock on HOSE, however, the closing price with the foreign investor was not as expected due to unfavorable market movement. Therefore, the bank is temporarily not on the floor, first to protect interest of shareholders, then to keep its brand name.

In fact, although VN Index has seen many good times and successfully conquered 1,000 points, the overall market is still very gloomy. The rise of VN Index mostly came from stocks which had an impact on the index, while most listed stocks declined, many even fell to the bottom in recent years.

Mr. Phan Dung Khanh, Director of Investment and Consultancy at Maybank Kim Eng. Securities Co. (MBKE), said that although the market has increased points, it has completely lost other channels, and even professional investment organizations have faced losses or lost profits on VN Index. The next supporting factor is strongly decreased liquidity. As of early October, market capitalization increased by about 14% but liquidity decreased by 35% compared to 2018, showing that the money flow into the market was very low.

In this unfavorable context, listing stocks would be risky, with a high probability of failure. If stock declines sharply, the growth momentum of the business will be affected. Many stocks listed at the peak of the market and stocks sold at good prices also plunged, such as BSR (Binh Son Refining and Petrochemical Joint Stock Company); POW (PetroVietnam Power Corporation); OIL (PetroVietnam Oil Corporation); Vietnam Technological and Commercial Bank (TCB); Bac A Bank (BAB); and Yeah1 Group Corporation (YEG).

In addition to the above two objective weaknesses, the absence of newly listed enterprises is caused by delay of SOEs in equitization and IPO. Since the beginning of the year, no notable equitized enterprise has been listed, not to mention being able to create an effect on the floor. The reason is that the divestment process is not smooth, with the main reason also coming from unfavorable movement of the stock market.

Expectation of big names

Although the number of businesses listed in 2019 is not as per expectations, investors still expect a boom for listed enterprises next year. Currently, there is a long list of businesses waiting on the floor, including many large businesses. The latest is Vietnam Maritime Commercial Joint Stock Bank (MSB) that has just submitted an application for listing on HOSE. If approved, MSB will be the 11th bank to be traded on HOSE and the 20th bank to be listed on the stock market.

With the appearance of MSB, the list of businesses waiting on HOSE will be 12 units with a total registered stock of 5.76 billion shares. Among them are prominent names such as Vietnam Rubber Group-Joint Stock Company (GVR); Military Insurance Company (MIG); Duc Giang Chemicals Group JSC (DGC); Kien Giang Construction & Investment Consultancy Corporation (CKG); and Investment and Industrial Development Corporation (BCM).

Most of the noticeable businesses on the list that are waiting to be listed are Ha Noi Plastics Joint Stock Company (NHH) which has just been approved to list shares on HOSE. NHH is very concerned of its investors, because this is a Vietnamese enterprise in the global supply chain. NHH is currently a partner of large domestic and foreign corporations such as Honda, Toyota, Piaggio, Panasonic, LG, Samsung, and VinFast. This is a member unit of An Phat Holdings Group which is holding 53. 2% of capital. Recently, NHH announced its business results for nine months of 2019 with net revenue of VND 864.5 bn (up 21%) and profit after tax of VND 39.7 bn (up more than 30%).

Translated by Hoa Nam

Thao Nguyen

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