Stocks hold strong but businesses still in red

Saigon Investment
(Saigon Investment) - Many stocks have gained in value from a long period of steady continuous market increase and are now trading strongly. On the other hand, business and manufacturing companies are still in dilemma and continue to face difficulties due to the ongoing Covid-19 pandemic. 

THD rose from the bottom at VND 4,249 per share to VND 115,000 per share in 2020.

THD rose from the bottom at VND 4,249 per share to VND 115,000 per share in 2020.

Positive stock market 

It is quite clear that 2020 was the year with the most interesting fluctuations in the trading history of Vietnam's stock market. The VN Index plunged 33.5% in the first quarter due to the impact of the sudden outbreak of the Covid-19 pandemic, from 991.46 points to a low of 659.21 points on 24 March session. However, owing to many positive factors, the stock market became the most attractive investment channel. Large amounts of cash flow pouring into the stock market helped the VN Index recover from bottom, to an increase of 14.87% by the end of the year.

According to data on the three trading floors, namely, HOSE, HNX and UPCoM, almost 158 stock codes have increased by 100% in about 252 trading sessions in 2020. The top ten stocks with the strongest increase in the stock market in 2020 have increased from 2.5 times to 27 times. The lead was taken by Thaiholdings JSC (THD) from the bottom at VND 4,249 per share in session on 19 June,  to VND 115,000 per share in closing session on 31 December. Thus, in just six months after being listed, this stock increased in share price by 27 times. This was followed by FLC Investment and Asset Management JSC (GAB), which stock increased from VND 17,350 per share to VND 196,800 per share, equivalent to an increase of 1,111%.

The biggest gainers among other top ten include: SCI E&C JSC (SCI), which increased 647%; Danameco Medical Corporation (DNM) increased 439%; Bao Thu Industrial Development and Investment JSC (BII) increased 350%; Enteco Vietnam (GMA) increased 344%; South Hanoi Urban and Housing Development Corporation (NHA) increased by 316%; Digital World JSC (DGW) increased by 282%; Saigon-Hanoi Securities JSC (SHS) increased 256%; and Sao Thang Long Investment JSC (DST) increased by 250%.

Businesses fare poorly

Even though some of these stocks fared very well in the stock market, many of these codes in the top ten group still fared poorly in their businesses, some even faced high losses. For example, although DST recorded an increase of upto 250% in 2020, it is still doing very badly in business. According to financial statements of the third quarter of 2020, DST accumulated losses of nearly VND 6 bn.

The same was the case of BII, where right from the beginning of 2020, its Tuynel brick factories and sand factories stopped working, so they were not able to generate any revenue for the rest of the year. Towards the end of the third quarter of 2020, BII lost almost VND 55 bn, and by September 2020 the losses had increased to VND 124 bn. NHA also saw tremendous losses with net profit decreasing by 26% towards the latter half of last year.

Although the Hoa Sen Group Joint Stock Company (HSG) is not among the top ten stocks with the highest price increase in the stock market, it surprised investors with an increase of nearly 200%. This sharp increase in the price of HSG shares was forecast by investors as steel business recovered strongly since the third quarter of 2020 in all three main steel segments, namely, construction steel, galvanized steel sheets and steel pipes. According to the fiscal year 2019-2020, HSG reported a profit of about VND 1,100 bn, up 204% and exceeding by 175% of the yearly target.

However, the rising wave of HSG created suspicion and doubt among investors. Chairman Le Phuoc Vu always sells profit-taking shares. Specifically, during the period from 4 December 2020 to 2 February 2021, the Hoa Sen Investment Group Company Limited of Mr. Vu registered to sell all 43.1 million shares of HSG. Previously, the same company sold 30 million shares of HSG with the aim of solving the company's financial needs. This is the number of shares bought by Hoa Sen Investment Group Company Limited when HSG bottomed out due to losses in previous years.

Although Mr. Vu continued to sell every time the share price went up, at the 2021 Annual General Meeting that was recently held on 21 January, he drew a very bright picture of HSG in coming time. Specifically, HSG would be investing in the development of a Hoa Sen Home interior and Building Materials Supermarket system. In 2021, HSG was planning to invest in 150 supermarkets, with the aim of increasing to 1,200 supermarkets by 2025. By taking this huge investment step, Mr. Vu was confident that HSG would quickly turn into a billion-dollar enterprise, showing increase in revenue and profit. Profits by the year 2025 are targeted to reach VND 77,971 bn, equivalent to USD 3 bn.

Investors baffled

THD continued to increase strongly in the early trading sessions in 2021 and is currently trading at VND 175,000 per share, making a strong jump from VND 115,000 per share. Thus, from mid-2020 until now, THD recorded a high increase by about 41 times, and with this rise in share price, THD became the highest priced share code on the HNX, although it listed less than a year ago. Such occurrence in the stock market is continuing to baffle investors who are still quite new to trading in the stock market.

THD entered the stock exchange as a new enterprise in 2011 with the first name Kinh Thanh Investment and Development JSC. THD's main business activities involve building materials, trade, foods, and real estate leasing and investment. In particular, the commercial activities of construction materials and real estate leasing brings in most of the revenue. THD's founder, Mr. Nguyen Duc Thuy, currently owns 10.78 million THD shares, equivalent to 20% of the capital.

This giant leader is known to investors as the "boss" of two teams that played in the national championships, namely, Xuan Thanh Cement Saigon and Quang Nam. By the end of 2020, THD closed listing by issuing 296 million shares at a price of VND 10,000 per share to increase its charter capital from VND 539 bn to VND 3,500 bn. It is worth mentioning that instead of using this new capital to supplement production and business activities, THD will use almost all the raised capital to buy 204 million shares in ThaiGroup at a maximum price of  VND 15,000 per share.

Kim Giang

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