Once upon a time… nostalgia of first stocks

YEG - Dream turned Sour

(ĐTTCO) - Investors at present are questioning whether the latest decision by the Tan Hiep Phat Beverage Group (THP) to invest capital in Yeah1 Group JSC (YEG) will help YEG revive its fortunes after being cut-off by YouTube, and if the viewers will retain the same confidence in the company as they have done in the last many years. 

YEG was once one of the most fastest-growing mutichannel media conglomerate in South East Asia.

YEG was once one of the most fastest-growing mutichannel media conglomerate in South East Asia.

Fast growth

The Yeah1 Group (YEG) was established in 2006 by Mr. Nguyen Anh Nhuong Tong and his associates via an online website www.yeah1.com, which specialized in providing entertainment news for the younger generation of people. YEG started with an initial revenue of only USD 150  and soon built a viewership of about 40,000 youth.

Within the next few years, YEG became one of South East Asia’s fastest-growing multi-channel media conglomerate, and in Vietnam it became the largest entertainment channel. By 2008, YEG had more than 400,000 followers, ten times the number since it was established. In the same year, YEG founded Yeah1 TV, a television channel specializing in providing entertainment information and broadcasting nationwide.

 In 2010, YEG continued to expand its network television by opening two new channels, namely, Yeah1 Family, which targeted young Vietnamese households, and iMovie TV, that broadcast high quality movies for young people. With this new approach, YEG quickly reached a viewership of two million people.

YEG then extended the entertainment segment onto YouTube, which was becoming popular among the younger generation, and began showing entertainment programs and offering advertising services on YouTube. In 2015, YEG became a multi-channel partner of YouTube, increasing its following to 2.4 billion users and gaining revenue of around USD 19 mn. One year later, this growth pattern touched phenomenal heights by gaining an astonishing 19.7 bn viewers and the company was raking revenue upto USD 25 mn.

Another two years later in 2017, YEG continued to expand its service network, and became the sole partner of Google in Vietnam and Southeast Asia through its subsidiary Netlink, which then provided online advertising services to almost 600 websites worldwide.

With these impressive achievements, YEG expanded its investments in the Philippines, Indonesia and Thailand, through mergers with various entertainment companies. In particular, YEG joined hands with Universal Music, the world's largest music company, to launch UNI Channel. This became one of the first channels that specialized in music related activities for young people in Vietnam.

Fall of YEG

With its rapid growth plans and entry into large but fairly new business segments, YEG soon became one of the most sort after stocks on HOSE. In the very first trading session on 26 June 2018, YEG increased its amplitude from a reference price of VND 250,000 per share to VND 300,000 per share, and peaked at VND 343,000 per share in just three sessions. At this peak price, market capital of YEG was VND 9,400 bn, an impressive 34 times its charter capital.

However notably, before and after their listing, YEG had made unusually large transactions. These transactions were later detected by the Inspector of State Securities Commission of Vietnam (SSC). This led to the SSC fining VinaCapital Venture Investment Ltd (DFJ) and the YEG Chairman Nguyen Anh Nhuong Tong. Following this incident YEG shares fell below VND 200,000 per share. This decline not only caused huge losses to its small shareholders but to even its foreign organization, Macquarie Bank Limited in Australia, who had to suffer a loss of almost VND 8.1 bn after only one month of investing in YEG. Macquarie Bank had previously bought YEG shares for VND 300,000 per share.

In March 2019, YEG shareholders were continually receiving information that YouTube was to terminate the Content Storage Agreement (CHSA) for financial and subsidiary related advertising segment of YEG. According to an initial announcement, YouTube said that SpringMe Pte Ltd, a Thai-based company in which YEG had 16.93% stake, had indulged in a channel management activity that was not suitable to the practices followed at YouTube. This led to YouTube applying the same policy to all other companies related to YEG activities by its Adsense network, including those at Yeah1 Network Pte Ltd and ScaleLab LCC.

Immediately after this information came out, YEG took a drastic plunge from almost VND 245,000 per share at a session on 3 March 2019 to only VND 37,000 per share at the session on 31 December 2019. After this horrific decline in repeated sessions, YEG began to fall into a state of no buyers, making it extremely difficult for investors holding stocks to sell or cut their losses. Even though the business announced a plan to buy back 3.1 mn treasury shares to keep up its price, investors still sold off because they no longer expected a recovery of the business after YouTube cut off ties with YEG.

Bleak future

After the relationship with YouTube was terminated and exactly one year later, YEG suddenly received capital from a new strategic partner. Ms. Tran Uyen Phuong, the daughter of Mr. Tran Quy Thanh, General Director of Board of Directors at THP bought up nearly 6.1 mn shares of YEG for about VND 50,000 per share, with total value of VND 306 bn. With this purchase, Ms. Phuong held 22.04% of the company capital and officially became a major shareholder at YEG.

With Ms. Phuong’s arrival, YEG signed a strategic contract with THP. Under the agreement, the two sides would cooperate in comprehensively developing applications based on Yeah1 digital media technology and try to reach directly to users, especially the younger people, via marketing programs throughout 2020. The two partners embarked on developing Mega1 application to prioritize boosting of sales of the THP beverage giant, targeting 50% sales growth for THP and 150 million users for the program.

Association with Ms. Phuong and THP helped YEG increase share price from VND 50,000 per share to VND 83,000 per share. However, soon after, HOSE suddenly announced putting YEG on alert because of losses suffered in 2019. According to the 2019 financial statement, profit after tax in the parent company was negative at VND 385.33 bn, and undistributed profit after 31 December 2019 was at VND 305.39 bn. As a result, YEG shares plunged to VND 45,000 per share in the session on 24 March. After YEG announced its business results for the first quarter of 2020 with revenue and profit at only 14% and 4.5%, respectively, any future prospect of revival for the company looks bleak. 

Kim Giang

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