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Securities companies report profit for 2007
Most securities companies have reported profit for 2007. However, analysts say that 2008 will be a year of ups and downs for them.
By April 9, 2008, 16 securities companies had released their financial reports for 2007, which showed wonderful business results.
Though the second half of the year witnessed the sharp falls of the stock market, nearly all securities companies made a profit last year. Only one of the 16 companies, Nam Viet, suffered a loss, of VND1.573bil ($93,750).
Some of them saw splendid business results. For example, An Binh Securities Company, which lost VND251mil ($15,687) in 2006, made a profit of VND60bil ($3.75mil) in 2007. Asia Commercial Bank’s profit soared from VND73bil ($4.56mil) in 2006 to VND332bil ($20.75mil) in 2007, while Dai Viet Securities got VND80bil ($5mil) in profit in 2007, while it was only VND855mil ($53,437)in 2006. De Nhat earned VND39bil ($2.43mil) in 2007 while it got VND18bil ($1.12mil) only in 2006. Rong Viet, the newcomer in the market, recorded profit of VND43bil in its first year of operation. FPT Securities also reaped VND9bil ($562,500) in profit in its first year.
Most securities companies established in late 2006 or early 2007 reported the modest profit of several hundred million VND in 2007.
However, financial experts have warned that 2008 will be a very difficult year for securities companies. Especially, they say that small companies which are not backed by financial institutions of big general corporations will be merged into other bigger companies.
Eight deals of securities companies M&A (merger and acquisition) have been reported over the last two months. In some of the deals, foreign investors bought 49% of the stakes of local securities companies.
Morgan Stanley, for example, purchased stakes of Huong Viet, and turned the company into Morgan Stanley Huong Viet Securities Joint Stock Company. Huong Viet began operating in 2007, during which year it earned the post-tax profit of VND717mil.
Golden Bridge, an investment fund, purchased 49% of the stakes of Click & Phone Securities Company, while Malaysia’s RHB purchased 49% of Vietnam Securities Company.
2008 is thought will be a hard year for securities companies due to the falls of the stock market. Analysts say that some companies will have to declare bankruptcy if they cannot find foreign or domestic partners to sell stakes to.
There are 100 operational securities companies and 20 applications for setting up new companies are awaiting licences.
Despite the continued falls of the stock market and bad business performance of securities companies, investors still want to set up securities companies because they can see the big potentials of the market in the long term with the growth rate of 50% per annum.
Dragon Capital, an investment fund, predicts that by 2010, the market capitalisation value will reach $100bil. There will be 1mil investor accounts and 500 listed companies. By that time, the average transaction volume will be over $100mil.
VNN
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