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Three hot issues during shareholder meeting season
This week will see a series of shareholder meetings, which are expected to be hotter than previous years, with a lot of questions to be raised by investors.
The General Director of a listed company complained that he has become nervous as the shareholder meeting season begins, as he anticipates the questions shareholders will pose at the meetings.
Like many other companies, his company’s business has not been satisfactory over the past year, with the export market narrowed. The company has not cut down the workforce, but workers have less working hours and lower incomes.
Approximately 10 shareholders’ meetings occurred in the last week. However, the ‘shareholder meeting season’ will only officially kick off this week.
Analysts say that shareholders will ask for an explanation of the leadership of companies regarding the business results of the last year and about figures in the financal reports.
According to Ngo Van Minh, Deputy Head of the Analysis Division under Eurocapital Securities Company, the companies that made financial investments in 2008 will be under pressure. Shareholders of many enterprises only know that the enterprises make investments, while they do not know the specifics of the businesses’ investment portfolios.
After releasing the 2008 finance report, which showed a loss, the leadership of the Refrigeration Engineering Enterprise (REE) committed it’s mistakes in making financial investments and explained the business activities of the company. The move by REE’s leadership received active response from investors. However, very few listed companies have committed mistakes like REE.
“If investors have experience, they will be able to truly assess the capability and experience of businesses’ leaders,” said Tran Tien Dung, an investor on ACBS trading floor. Dung believes that the shareholder meeting season will witness tense inquiries from investors.
In the context of economic recession, investors well understand that companies will set lower business targets this year. Minh, from Eurocapital, said that investors will be interested in whether businesses can sell commodities, if business plan are feasible, as well as how to retain both export and domestic markets. “Expanding workshops and making investments in other business fields will not be the plan shareholders are interested at this moment,” Minh said.
Most of the forecasts have leaned towards the viewpoint that the world’s and Vietnam’s economy will prosper by the end of the year or early 2010. However, Dung, as an investor, said that the business plans need to consider the worst-case scenarios as well.
How high dividends are and how to pay dividends, in cash or bonus shares, proves to be the issue that catches the most interest from investors.
Before the shareholder meeting season, the Vietnam Association of Financial Investors (VAFI) suggested that listed companies should pay dividends in cash which proves to be more attractive to shareholders in the current period.
Dung also thinks that investors will also discuss whether to mobilize more capital by issuing more shares or geting loans from banks, as the bank interest rates have split in half over the previous year.
VietNamNet/VNE
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