Disappointed with RAL

Although it was operating a good business, the recent fire at Rang Dong Light Bulb and Water Thermos Joint Stock Company (RAL) has caused a negative impact on the stock market.

Rang Dong after the recent fire.

Rang Dong after the recent fire.

Even though RAL was listed on the stock market for a long time, its shareholders and investors are now disappointed by the lack of information provided by the company.

One day after the fire on August 28, Nguyen Doan Thang, Chairman of the Board cum General Director of RAL, published an initial estimate of property damage of about VND 150 billion, less than 5% of the total assets. In June 30, RAL total assets were more than VND 2,881 billion, of which, cash was about VND 538 billion, inventory was nearly VND 1,070 billion, and short-term debt was at VND 1,460 billion.

It is interesting to note that through the actual inspection of the General Department of Environment, RAL leaders only admitted to losses of 480,000 fluorescent light bulbs, mostly 1.2m long lamps, using liquid mercury (Hg) with content of 20mg a piece; 1.6 million compact light bulbs using 1 tablet of Amalgam a piece with weight of about 11.5mg and Hg content of 22-30%; and two million products of low power tungsten lamps. In addition, there was raw material and some toxic chemicals.

But before that, RAL had said that it had researched the use of Amalgam instead of liquid mercury and started to use it from 2016. This conflicting information makes many people believe that Amalgam was a safe material which did not contain mercury, and was non-inflammable.

So far, since the incident upto now, RAL leaders have twice announced information to shareholders and investors. But neither of the above information meets the requirements of the listed public company. Specifically, according to Circular 155/2015 / TT-BTC of the Ministry of Finance guiding the disclosure of information on the stock market, public companies must disclose extraordinary information within 24 hours from the occurrence of an event that greatly affects production and business activities, or the company situation.

This is also the reason why the Ho Chi Minh City Stock Exchange (HOSE) has sent a request to RAL to urgently disclose information in accordance with regulations. By the end of September 8, HOSE still had not received an explanation or disclosure information to verify the estimated damages of assets, as well as the impact on the production and business situation after the fire.

RAL was one of the first companies to be listed on the stock market in 2006, with an initial charter capital of VND 79 billion. RAL only increased capital once in 2007 to VND 115 billion to attract additional capital to the investment projects approved at the general meeting of shareholders to increase production capacity. As per the rule not to rush to raise capital, RAL was one of the few businesses on the stock exchange that did not expand their business activities outside the industry, despite the large and steady growth of businesses over the years.

In 2018, RAL recorded an impressive revenue and profit of VND 3,637 billion and VND 204 billion, while the charter capital was only VND 115 billion. As a result, RAL's EPS was always on the top of listed companies with around 18,000 VND/share. According to the business report for the first six months of 2019, RAL continued to record a stable growth with revenue of VND 1,804 billion (up 21%) and profit after tax of VND 96.4 billion (up 20%).

However, after the recent fire incident, the risk to business activities of RAL increased significantly. Shareholders have more reason to doubt, because upto now, this business has not published official details about the damages. According to the latest information published by RAL on September 13, the company has not updated any new information, apart from a preliminary estimate of VND 150 billion in losses as the first notice on August 29.

The delay in giving the statistics of losses, plus the fraud in the provision of information, has led to the image of RAL being gradually tarnished in the eyes of investors in the stock market. This accident has made the share value fall to 18%, from VND 88,000 per share at session on August 28, and down to VND 72,000 per share at session on September 10.

Translated by Mathew Hùng

Kim Giang

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