Coal Stocks Attractive to Investors

On the Vietnam stock market, not all stocks are less attractive in the eyes of investors. Evidence shows that some organizations are still trying to raise the percentage of ownership in the business sector. For example, Refrigeration Electrical Engineering Corporation (REE) has quietly acquired and became a major shareholder in NBC and TDN. On August 24, REE official continues to collect and hold 6.67 per cent stake in NBC and 8.14 per cent of the TDN.

 

According to Tan Viet Securities Company, the coal industry has great potential. About 39 per cent of the electricity produced worldwide is from coal and this rate will be maintained until 2030. Coal is vital not only for electricity production, but also as raw material for a number of industries such as steel, metal, cement, liquid fuels, paper and fertilizer.

 

In the first ten months of this year, revenue of Vinacomin reached more than VND 67 trillion, or 69.6 percent of the year’s plan and equalling to 79.3 percent over the same period last year. Of which, revenue from coal production accounted for the biggest proportion, with about VND44.9 trillion.

 

In Jan-Oct, Vinacomin’s coal production reached 36.7 million tonnes, down nearly 8 percent year-on-year and equalling 74.9 percent of the year’s plan.

 

Its coal sales in Jan-October were estimated at 30.7 million tonnes, down nearly 15 percent on year. Of which, coal export still continued to face many difficulties with about 10.6 million tonnes, down nearly 20 percent on year.

At 8 companies listed coal, II/2012 quarter, only four companies Nui Beo Coal (NBC), Charcoal Cao Son (TCS), Coal Ta Hu (THT), Mong Duong Coal (MDC) are profitable businesses. Coc Sau Coal (TC6), Deo Nai Coal (TDN), Ha Lam Coal (HLC), Than Wine List (TVD) all holes. MDC, if not offset by other interests, will also have a loss.

 

Ha Lam Coal JSC. (HLC)’s net profit tumbled to VND4.4 billion in Q3/2012 from VND11 billion a year ago due to interest expense rise of 80 per cent to VND70 billion. The company’s revenue reached VND403 billion in the quarter, up 7 per cent on-year.

 

Mong Duong Coal JSC. (MDC) made a net profit of VND 980 million in Q3/2012, down 66.4 per cent from VND2.9 billion a year ago, the firm said in its financial statements posted on the HNX’s website. The company generated revenue of VND293 billion in the quarter, down 9.7 per cent from VND324.1 billion over the same period of last year. The firm had total assets of VND955.6 billion at the end of quarter, against VND1.15 trillion at the beginning of this year.

 

Nui Beo Coal JSC (NBC) made a net profit of VND13 billion in Q3/2012, up 60.3 per cent from VND8.1 billion a year ago. The company’s revenue reached VND494.4 billion in the quarter, up 12.7 per cent from VND438.6 billion over the same period last year.

 

Hatu Coal JSC (THT) swung to a net profit of VND1 billion in Q3/2012 from a net loss of VND9.8 billion a year ago, the firm said in its financial statements posted on HNX’s website. The company generated revenue of VND270 billion in the quarter, down 25.3 per cent from VND361.2 billion in the same period last year.

 

Cao Son Coal JSC. (TCS) posted a net loss of VND4.2 billion in the third quarter of this year due to big expenses. In the first nine months of this year, TCS posted VND60 billion net profit, compared to VND84.5 billion net loss a year ago.

 

Coc Sau Coal JSC. (TC6) suffered a net loss of VND1.2 billion in spite of revenue rise in Q3/2012, versus a net profit of VND13.5 billion a year ago. The firm attributed the net profit fall to coal selling price drop at the request of Vinacomin and input material price increase.TC6 posted VND19 billion net profit in the first nine months of this year, representing a strong fall from VND66 billion a year ago.

 

Most coal companies report reduced coal consumption, but this is only temporary, the impact of general economic crisis. When the economy recovers, the demand for fuel in general and coal in particular is great. Meanwhile, world coal prices will rise again and the companies involved in coal exports in Vietnam will improve their profitability.