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Listed companies considering leaving the stock market
A lot of listed companies are considering quitting the stock market since they see the assets decreasing dramatically in accordance with the share price decreases. Also, they fear that their companies would be acquired one day.
Masan-VCF deal – a big lesson
In September 2011, the members of the board of directors of Vinacafe Bien Hoa (VCF – HCM City Stock Exchange HOSE) started at the offer to purchase 50 percent of the company’s stakes.
The one, who made the offer was a “big cheese” in the consumer goods sector – Masan Consumer MSF, which also lists its shares on HOSE.
The affair was wrapped up just after one month, when Masa successfully purchased the volume of stakes it needed. Nguyen Dang Quang, Chair of Masa Group and Truong Cong Thang, General Director of Masan Consumer MSF have become the members of the board of directors of VCF.
The purpose of the affair is clear: Masan strives to conquer the soluble coffee market, where VCF has been the leader over the last 30 years with a large distribution network.
Stocks getting as cheap as vegetables, risk of being swallowed high
The Masan-VCF deal was completed very quickly, possibly because Masan has been preparing for the plan for a long time, and it decided to implement the plan when the stock prices decreased, which helped reduce the costs of the affair.
Public companies have realized that they are facing the high risks of being swallowed. People once thought that it was difficult to acquire VCF because of the high proportion of stakes held by the State. Besides, VCF was a well known company with the big total assets, and the stock price was high at 80,000 dong per share.
However, even with such conditions, VCF still became the aiming point of powerful groups. Therefore, other listed companies have every reason to worry about their “fate”, especially when their stock prices have been decreasing dramatically.
Statistics show that 400 out of the current 700 listed companies have their share prices staying at the levels lower than the face value of 10,000 dong. A lot of shares are being traded at 2000-5000 dong per share, while the book value of the enterprises are higher than the face values.
The figures show that the assets of listed enterprises have been undervalued, and that the stock prices have been much lower than the actual values. This could be a reason which prompts big economic groups to acquire other enterprises, because they understand that it is now the right time for them to buy businesses at low prices.
Listed companies quit the stock market
It is still too early to say that it is a growing of tendency for listed companies leaving the stock market. However, it is true that a lot of listed companies have lost their confidence on the stock market.
SQC, SGT, TBC, CSG, TRI, V11, S27 all have asked for removing their listing for different reasons. However, the common reason behind this is that the companies cannot mobilize capital through the stock market, while the stock prices have plummeted.
On November 15, Tribeco, (TRI – HOSE) consulted with shareholders about the removing of the listing of TRI shares at HOSE. Prior to that, on September 30, S27 – HNX asked for removing the listing.
Explaining the decisions, analysts say that listed companies cannot see the benefits the listing can bring, while they understand that the listing would bring high risks.
It is clear that the undervaluation of companies’ stocks has been badly affecting their business. While listing companies do not enjoy the benefits from the listing, they have to follow the strict requirements set by the market. In many cases, businesses miss their investment opportunities because of the requirements.
Ngoc Thao
vietnamnet
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