Listed companies balancing dual scenarios

(ĐTTCO) - The volatility of the current ongoing Covid-19 pandemic has had a negative impact on almost all production and business activities of vitally important listed companies. 

Aviation is the most damaged sector in the pandemic, such as HVN with a negative second quarter profit of VND 6678 billion - a decrease of 540%.

Aviation is the most damaged sector in the pandemic, such as HVN with a negative second quarter profit of VND 6678 billion - a decrease of 540%.

Data compiled by Rong Viet Securities (VDSC) in the last six months on business results of 550 companies that represent 91% of capital value on the two floors of HOSE and HNX, shows a marked disparity in figures at the two exchanges. While the six-month profit after tax at HOSE decreased by 15%, at HNX there was an increase of nearly 3%.

Companies in successive loss

The most seriously affected company in Vietnam is the Vietnam Aviation Corporation (ACV), which is showing a hugely negative consolidated after-tax profit of just VND 6,678 bn, down by a pathetic 540%. The reasons for this tumultuous drop is being attributed to a sharp fall in service revenue by 50%, which is equivalent to VND 18,296 bn. This service revenue percentage of 50% can be broken down to a decrease of 43.5% in domestic passenger revenue, a 63.1% fall in international visitors and a 63% decline in transfer revenue. By combining both tourism and entertainment sectors, the decline has been upto 363%, which has directly affected the aviation industry.

At the annual shareholders meeting of 2020, the ACV Board of Directors set a target for 2020 with a negative after-tax profit of VND 15,177 bn. In order to reduce the working capital burden. The ACV Board of Directors also decided not to make deductions from any of the investment and development funds, and not pay any dividends in 2020 to ensure cash flow and maintain a balance in the current very worrisome Covid-19 pandemic situation that is affecting the overall business environment.

The Petroleum Industry is the second most seriously affected business, which is now showing a shocking decline of 223%. The petroleum industry's champion remains the Vietnam National Petroleum Group that is now showing a negative consolidated after-tax profit of a mere VND 692 bn, while in the same period last year the profit was at VND 2,635 bn.

The current reason is that the world oil price dropped sharply in the first quarter of the year, from USD 61.18 per barrel to only USD 20.48 per barrel, equivalent to a decrease of 66%. In the second quarter, although oil prices recovered to USD 39.27 per barrel, the resurgence of Covid-19 in the country and the implementation of Directive 16/CT-TTg on strict social distancing measures caused the demand for petroleum to decline.

Another of the country’s vital businesses affected is the Binh Son Refining and Petrochemical Joint Stock Company (BSR). The company has recorded heavy losses to the tune of thousands of billion dong in their half-yearly financial report. In their second quarter financial report, the company revenue fell to VND 13,737 bn, down by more than half compared to VND 27,843 bn in the same period in 2019.  

Despite huge cost cutting efforts, BSR still recorded a loss after tax of VND 1,898 bn. In the first six months, BSR recorded revenue at VND 31,727 bn, a decline of 38%. After deducting expenses in the first six months of the year, BSR reported a net loss of almost VND 4,255 bn, whereas in the first half of 2019 the net profit was about VND 704 bn.

The Habac Nitrogenous Fertilizer and Chemical Company Limited (DHB) is also continuously facing huge losses due to a high interest burden. According to their half-yearly financial report of 2020, DHB showed net profit at VND 693 bn, more than three times in loss than in the first half of 2019. The company’s undistributed after-tax profit at the end of the second quarter was also negative at VND 3,980 bn. By 30 June 2020, short-term financial lease loans and liabilities had decreased by VND 734 bn to touch VND 1,172 bn, but long-term financial lease loans and debts increased by VND 612 bn to touch VND 6,283 bn. Total short-term and long-term financial lease loans amounted to nearly VND 7,455 bn. In 2020, DHB foresees a loss of VND 1,132 bn, nearly double the VND 637 bn loss recorded in 2019.

In a similar negative scenario, the Khanh Hoa Power Joint Stock Company (KHP) unexpectedly announced their second quarter financial statement with an unusually high loss in operating history. KHP showed a loss of VND 164 bn. KHP net revenue in the second quarter reached VND 1,120 bn, down by 24%, but cost of goods (COGS) was up at VND 1,284.5 b. The reason was that KHP increased heavily on costs and expenses over this period. For example, corporate management costs increased the most with an increase of 70% and insufficient revenue made KHP face the biggest loss ever.

Banks on tight rope

For the banking industry, the first six months showed an average increase of 13%, which for the most part was supported by a group of private banks such as Vietnam Prosperity Joint Stock Commercial Bank (VPB), Vietnam Technological and Commercial Joint Stock Bank (TCB), Ho Chi Minh City Development Joint Stock Commercial Bank (HDB) and Tien Phong Commercial Joint Stock Bank (TPB).

However, the group of banks with state capital did not have a breakthrough, but saw instead more negative growth. For example, the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) recorded a weak six-month business result compared to the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) and the Vietnam Joint Stock Commercial Bank for Industry and Trade (VCB). According to BIDV first six-month financial statement, pre-tax profit was at VND 4,454 bn, down by 5.4%, mainly due to a decrease in 8.8% interest, despite tight control on operating expenses and other costs. BIDV is expected to continue to have a bleak year under the current Covid-19 pandemic phase.

The first six-month business results just announced by FiinPro, show that VPB is among the leading banks in completing 58.7% of their 2020 plan. VPB is also the first bank to announce optimistic second quarter business results in 2020. Profits for the first six months were unexpected and reached VND 2,951 bn, showing a rise of 44%. The reasons are attributed to cost cutting by 16% to 16.7%. In the first six months, profit reached VND 5,265 bn, up by 51.6%, of which FE Credit contributed a significant amount. Specifically, FE Credit closed the second quarter with a total loan value of VND 60,200 bn, up by 3.3%, profit before tax at VND 2,400 bn, up by 13%, with the second quarter profit at VND 1,500 bn.

HDBank too completed their annual profit plan, and according to their second quarter financial report, the consolidated net profit for this period reached VND 1,320 bn, up by 47.3% caused by a strong increase of 9.6% YoY loans, and an improved Net Income Margin (NIM) by 0. 78% over the same period which helped net interest income to increase sharply by 19.7%. Non-interest income also grew fairly well by 8.1%, while operating costs decreased by 12.6%.

In the first six months, HDBank recorded a net profit of VND 2,322 bn, up by 30.8%. One of the factors behind HDBank success is its cost cutting policy during the ongoing Covid-19 pandemic. HDBank operating expenses in the second quarter decreased by 28.4% YoY and down 43.1% QoQ. However, in the first quarter, operating expenses had increased sharply due to HDBank tackling the sudden effects of the Covid-19 pandemic.

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