Some stocks in limbo
According to data from the three exchanges, HOSE, HNX, and UPCoM, there are 88 stocks currently trading below VND 5,000 per share, of which six stocks are trading at less than VND 1,000 per share; ten codes trading from VND 1,000 to VND 2000 per share; and 19 codes trading at VND 2,000 to VND 3,000 per share. Specifically, six stocks are priced below VND 1,000 per share, which include An Truong An JSC (ATG); Cotec Investment & Land-House Development JSC (CLG); Soc Son Investment and Development JSC (DPS); Ha Noi-Kinh Bac Agriculture and Food JSC (HKB); NHP Production and Import-Export JSC (NHP); and Visaco Minerals and Investment JSC (VMI).
The common factor in all these stocks is that the production and business activities of these enterprises have been in a state of limbo and suffering huge losses. These companies have also been violating regulations on information disclosure on the stock market. For example, CLG was suspended from trading at the end of 2020 due to continued violation of information disclosure on the stock market. Before that, in October 2020, CLG was put under special control after receiving warning. Notwithstanding, even under special control, CLG received a reminder from HOSE about delay in submitting separate and consolidated financial statements for the second quarter of 2020; for half year results of 2020; and for third quarter of 2020.
HKB was also put into transaction suspension from 17 November 2020, for the same above reasons. Previously, HKB was put under control due to continuous violation of regulations on information disclosure on the stock market and failed to remedy the cause even after warning. Explaining this situation, HKB said that due to the complications caused by the Covid-19 pandemic, the untimely collection of records, documents, and personnel from member companies could not be done on time.
The company has not been able to review sufficient conditions to agree with the content of the auditor to issue audited financial statements of 2019 on time for information disclosure. In addition, HKB is operating under huge ongoing losses. According to the fourth quarter of 2020 financial report, HKB reported a loss of VND 15.3 bn, bringing undistributed after-tax profit by the end of 2020 to negative VND 88.8 bn.
Before falling into its current situation, HKB used to be a bright shining star on the HNX. In 2015, HKB was officially listed on the HNX with a reference price of VND 15,000 per share. At the time of listing, HKB was considered as one of the enterprises effectively operating in the agricultural sector. Its 2014 business results were positive with VND 455 bn in revenue and VND 19 bn in profit after tax. However, things started to change from 2017 onwards when HKB continued to lose money. In 2017 HKB saw a loss of VND 67.3 bn, in 2018 a loss of VND 142.7 bn, and in 2019 a profit of only VND 2 bn. From a peak of nearly VND 35,000 per share in mid-2016, HKB fell to only VND 800 per share.
Not only stocks with low prices, but many stocks with extremely high value also did not receive the attention of investors, causing the stocks to lose huge liquidity. For example, four codes Vietnam Cable Television Corporation (CAB), FPT Online Services Joint Stock Company (FOC), Ha Long Beer and Beverage Joint Stock Company (HLB), and Dong Anh Electrical Equipment Corporation (TBD), currently listed on UPCoM at the price of about VND 100,000 per share. Since being listed on the stock market from September to now, CAB has not had any transactions and the stock price has remained at the reference level of VND 140,900 per share for over a year. FOC, HLB, and TBD codes also did not improve when they fell into serious liquidity situations due to no buyers, while the holders also did not want to sell.
The sector with liquidity on the stock market today is the group of shares of water suppliers. According to statistics, only UPCoM has more than 20 water stocks, but almost no stock has liquidity. Despite losing liquidity, the water stock group is anchored at quite a high price. Can Tho Water Supply and Sewerage Joint Stock Company (CTW), Ba Ria-Vung Tau Water Supply Joint Stock Company (BWS), and Song Da Clean Water Investment Joint Stock Company (VCW) are currently trading at VND 30,000 per share, VND 35,000 per share, and approximately VND 50,000 per share, respectively.
In the context of a strong cash flow into the stock market, HOSE often fell into overload, but there are still many listed stocks that almost do not receive the attention of investors, although their production and business situation is quite effective. For example, the Ben Thanh Trading and Service Joint Stock Company (BTT); CII Infrastructure Construction Joint Stock Company (CEE); Ca Mau Trading Joint Stock Company (CMV); Petroleum Material Joint Stock Company (COM); Thu Duc Mechanical and Electrical Joint Stock Company(EMC); Hoi An Service-Tourism Joint Stock Company (HOT); CII Bridge and Road Investment Joint Stock Company(LGC); OPC Pharmaceutical Joint Stock Company (OPC); Saigon Fuel Joint Stock Company(SFC); Bien Hoa Packaging Joint Stock Company (SVI).
Lack of investor relations
If businesses make a loss and continuously violate the information disclosure, they may not be noticed by investors, which is a normal phenomenon, but the loss of liquidity in high-priced stocks is a rather unusual phenomenon. According to a leader of a securities company, this shows that the investor relations (IR) of many companies are being overlooked, leading to a situation of not allocating appropriate resources for this activity. While IR is an important activity to build trust with investors and the public, helping businesses attract investor attention, it also reflects the true value of the business and increases liquidity for stocks.
At present, only about 50% of companies listed on the stock market meet the standards for information disclosure. According to data published in the Annual Report 2020, the information disclosure of enterprises in 2020 has reduced, staying at 54% compared to 69.4% in 2019. Many enterprises after reaching the target made at initial public offering (IPO) or listing shares, often neglect IR activity. This leads to a lack of information, and reduced investor confidence in businesses. Therefore, listed companies need to set up their own IR department with a clear set of criteria to integrate financial and communication activities to ensure an effective, sustainable, multi-dimensional relationship, helping the investment community to appreciate properly the value of the enterprise.