As of September 30, 2012, as many as 131 stocks listed on the Hanoi Stock Exchange (HNX) are ineligible for margin trading because of operating losses. Especially, in recent months, many companies delisted from the bourse, and many listing cancellations are in preparation.
Prolonged losses
According to statistics, up to 90 per cent of listed firms voluntarily delisted as they suffered prolonged losses in the past years and concealed violation information.
Typically, Viet Hai Shipping and Real Properties Corporation (VSP) delisted more than 38 million shares because of losses in three consecutive years, with a total loss value of up to VND1,700 billion. Vung Tau Petroleum Trading and Service Joint Stock Company (VMG) removed 9.6 million shares from the HNX since no securities trading was recorded in 12 straight months. In the second quarter of 2012, VMG incurred a loss of VND1.37 billion, totalling VND2.06 billion in the first six months. Its accumulated loss grossed more than VND54 billion as of the end of the second quarter of 2012.
Previously, many companies delisted because of operating losses. Viky Plastic Joint Stock Company (VKP) ended listing on the Ho Chi Minh City Stock Exchange (HOSE) from June 25 due to loss in three consecutive years. An Giang Coffee Joint Stock Company (AGC) removed from listing on the HNX from July 17 because of negative owner’s equity. Cadovimex Seafood Import-Export and Processing Joint Stock Company (CAD - HOSE) left the HOSE on June 4 because of three straight years of loss. Cavico Viet Nam Mining and Construction Joint Stock Company (MCV) was sent off the HOSE on May 10 for repeated violations in information disclosure.
Some other companies have also revealed delisting plans since they have poor business performances and do not see expected benefits on the stock market. Typical examples are Lu Gia Mechanical Electric Joint Stock Company (LGC), Sai Gon Telecommunication & Technologies Corporation (SGT), Saigon - Quy Nhon Mining Corporation (SQC), Mekophar Chemical Pharmaceutical Joint Stock Company (MKP), Interfood Shareholding Company (IFS), Construction Joint Stock Company No 11 (V11), Song Da 27 Joint Stock Company (S27) and Orient Securities Corporation (ORS).
According to many investors, given current economic slowdown, more companies will voluntarily delist their shares from stock exchanges. Many companies with poor business results or extremely low stock prices, ranging from VND1,000 to VND3,000 per share, may suddenly inform shareholders of delisting plans. Most of delisted companies apply for voluntary delisting rather than mandatory action.
However, profit-making companies also want to cancel listing on HOSE and HNX for trading on UPCoM - the market for unlisted public companies. The vivid example was Song Da Construction and Investment Joint Stock Company (SDS). On September 14, 2012, the company officially delisted 2.8 million shares on the HNX. Although it was profitable in recent years, more than 80 per cent of shareholders voted for delisting. It gave only general, not specific, reasons for the move but many investors believed that there were many reasons for the leave of SDS, including the extremely low share price of VND4,000.
It is said that after companies are delisted, they do not have to follow strict information disclosure regulations. This is better for them in this condition of economic slowdown.
Listing cancellation in preparation
Recently, the HNX announced the delisting of Vinacap Telecom Electronics Joint Stock Company (VTE) because it failed to complete listing procedures within three months since the date of reception of listing applications. As a result, approximately 13.5 million VTE shares were forced to be delisted on October 4 without any day of free trade on the exchange.
Before that, HNX forced Mediplantex National Pharmaceutical Joint Stock Company (MED) to send off more than 5 million shares although the company had not floated its shares on the bourse. The move came as the company did not completed listing procedures within 3 months since the date of official listing approval. MED said that the Board of Directors held a meeting, voted for the delay in current listing plan and decided to wait for an appropriate time as the stock market was negatively declining. Besides, MED wants to focus on business operations and overcome difficulties.
Many banks with listing intention like VIB, East Asia Bank and Nam A Bank do not mention the plans because they are unlikely to attract investors at this point of time while lacklustre market will likely sink their share prices.
According to statistics, new listings on both the HNX and the HOSE declined more than 70 per cent in 2011 from a year earlier. In 2012, delisting cases (nearly 20 cases) outnumbered new listings.
Voluntary delisting and listing plan abandonment are becoming common. This shows that the attractiveness of the stock market has declined a lot.
Nguyen Tuan
Vietnamese
