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Dismal debuts follow dud decisions
The recent share debuts of taxi firm Vinasun and shipping agency Vinaship on the Ho Chi Minh City stock market have suffered because of poor pricing and timing decisions.
Vinasun posted one of the year’s most astounding first half results, with net profit soaring 443 percent to VND33 billion (US$2 million) and revenue surging 72 percent to VND370 billion ($22.37 million).
More than 90 percent of the company’s earnings come from cab services. The remainder is generated from travel and food businesses.
“Unlike most companies, Vinasun’s earning targets rarely rely on bank loans because more than 94 percent of its daily revenue is in cash,” said Phung Huu Hanh, a stock analyst from Viet Dragon Securities Corp. “And that’s the company’s great advantage.”
Vinasun is one of Vietnam’s biggest taxi firms with more than 1,300 cabs, mainly in HCMC and adjacent Binh Duong Province.
On July 29, the first day of trade of Vinasun’s 17 million shares, the stock plunged from its reference price of VND60,000 to VND48,000.
The shares hit the boards a week after the government announced a 34 percent rise in retail fuel prices. Investors dumped the stock, fearing its profits would be eroded by higher fuel costs.
The taxi company chose July 29 for its debut because the market had started to rally from its year low on June 20. Once a state-owned company carries out an initial share offer (IPO), it can begin trading its shares on the stock market at any time.
A new stock’s opening price, known as its reference price, is calculated by the firm and its broker, acting as listing consultant, on the basis of the company’s book value and price per earning forecasts.
Vinasun’s reference price was set at nearly 2.5 times the price of shares of unlisted rival Mai Linh trading in the over-the-counter market in late July.
However, some analysts sayVinasun’s current share price remains attractive, with a first half earning per share (EPS) of VND2,000. Vinasun shares Thursday lost VND1,500 to close at VND30,300.
Vinaship sails late
Shipping agency Vinaship opted to float 20 million shares on Monday, when the market had retreated a little from a 19 percent rally in the month of August.
Since the stock’s first day of trade, shares of the shipping firm have dropped more than 20 percent to close at VND39,800 Thursday. The VNIndex of 158 companies and four closed-end funds fell for a fifth straight day Thursday to close at 497.01 points.
The fallout of its debut timing decision looks set to continue, with Kim Eng Securities Company’s Ken Tai has said he expects the VN-Index will remain under 500 points in the short term.
Vinaship and its broker Capital Securities Company incorrectly calculated the company’s book value at VND32,727 a share. Before its shares began trading, the HOSE asked the firm to reduce its book value to VND15,176. Shaken investors sold the stock heavily on its first day of trade.
Vinaship, which possesses a fleet of 18 vessels with a total weight of 172,620 DWT (dead-weight tons), announced that for the first six months of the year after-tax profit rose 41 percent to VND55.65 billion ($3.36 million) from a year earlier while its revenue increased 52 percent to VND442.5 billion ($26.76 million).
“Vinaship is on track to achieve this year’s earning target early,” said Viet Dragon Securities Corp.’s Phung Huu Hanh. “Revenue and profit will rise on the back of increases in fees and shipping demand at the end of every year.”
Thanhnien
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