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No solution found yet for businesses that made financial investments
As the national economy and the stock market have not recovered yet, the businesses which have suffered from financial investments still cannot find any suitable solutions to their problems.
The VN Index on March 9 dropped by 66.77 points (21%) to 247.85 points, lower than the last day of 2008. This also spells that a heavier burden will be put on the businesses which have suffered from financial investments since the stock prices have dropped to the level lower than the time of closing the 2008 books.
The Refrigeration Engineering Enterprise (REE) used more than a half of the stockholder equity (VND 1.2 trillion) to make financial investments. As the stock market fell, the investment value devaluated dramatically and the enterprise’s profit from its main business field could not offset the lost investment value.
The financial investments brought the profit of minus VND 467 billion to REE, but the profit from main business fields helped ease the loss. The finance report showed that by December 31, 2008, the day of closing books, REE had incurred the loss of VND 139 billion.
With the loss, REE was put under the control by the HCM City Stock Exchange. In the meeting with investors recently, Nguyen Thi Mai Thanh, Chairman and CEO of REE admitted her shortcomings. If the VN Index does not increase to the level equal to or higher than that of late last year, the financial investments will lose more value.
Experts said that if the VN Index still keeps at 250 points by the end of March, the value of financial investments will drop by another VND 80 billion. If the profit from other business fields cannot offset the loss from financial investments, REE will not be able to escape from the special control.
Institutions share the same viewpoint that the stock market is not likely to recover in 2009 to help enterprises to regain the financial investment value. In this case, if enterprises continue holding on the investments for one more year, they will have another difficult year. Meanwhile, they do not want to sell securities right now when the stock prices are too low.
Huynh Anh Tuan, Director of SJC Securities Company, also said that if holding the shares, enterprises will endure the ‘long pain’ as the stock market is not likely to recover this year.
As for REE, its business fields of real estate and mechanical refrigeration have been running well which can bring a decent profit. As such, REE can settle the problem in stock investments, it would receive profit immediately. Therefore, REE’s leaders have set an ambitious plan of gaining the profit of VND 250 billion in 2009.
How about Bao Viet Securities Company, which incurred the loss of VND 452 billion in 2008, SAM, a telecommunication cable and material producer, who lost VND 67 billion, and Gemadept, with a loss of VND 168 billion?
On March 5, in the meeting with investors, Do Van Trac, Chairman and CEO of SAM, said that the company could not find the proper solution. Telecommunication cables, the main business field of SAM, has been narrowed.
As for Bao Viet Securities, the company with the main business activities relating to the stock market, the situation is clear that it will remain difficult for the company until the market recovers.
Gemadept, a shipping service provider, also cannot find the way out as the business field is also facing difficulties.
VietNamNet, NLD
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