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60 percent of listed companies see profits down   2012-02-12 - TBKTSG

Though official statistics have not been released yet, the State Securities Commission SSC has estimated that up to 60 percent of listed companies saw their profits decreasing.

 

2011 was a difficult year for both the macro economy and the stock market. Therefore, listed companies had to confront a lot of problems, from the input material price increases to the sky high lending interest rates. Meanwhile, it was really difficult to attract capital through the stock market.



To date, 85 listed companies have reported loss, which is higher by 30 companies than the previous year.



Of the unprofitable companies in the fourth quarter of 2011, there were many real estate firms. As 80 percent of the capital the firms used to develop projects came from bank loans, the firms most severely suffered from the high lending interest rates.



Quoc Cuong Gia Lai, for example, incurred the loss of 30.76 billion dong in the whole year 2011, while it made a profit of 236.9 billion dong in 2010. This has been blamed on the high finance costs, mostly the high capital cost: it reached 23.47 billion dong in the fourth quarter, up by 160 percent from the 9.03 billion dong of the same period of the last year.



Explaining the tardiness in the implementation of the Quoc Cuong 1 apartment project, Quoc Cuong Gia Lai emphasized the high bank loan interest rates.



“It was very difficult to access bank loans, because the banks restrict the lending to fund real estate projects. In case of successfully accessing bank loans, the lending interest rates were sky high at 22-24 percent per annum,” the company’s report reads.



Like Quoc Cuong Gia Lai, the Song Da Urban Area and Industrial Zone Investment & Development SJS has reported the loss of 61.93 billion dong in the fourth quarter and the accumulative loss of 46.22 billion dong in the whole year 2011. The business result represents a sharp decline from the profit of 456.12 billion dong in 2010.



The continued fall of the stock market has seriously affected the operation of securities companies, leading to the repeated loss to the companies. To date, 12 listed securities companies have reported loss, mostly because of the bad brokerage and trading activities, including AVS, BSI and BVS.



In fact, not only securities companies, but many other companies that have financial investments, also incurred loss because they had to make provision against the risks in the investments.



These include Sacom (SAM) which has the total finance cost, including the provisions against the stock price decreases, reached 205 billion dong in 2011. The high provisioning has led to the loss of 204.46 billion dong in 2011, while it made a profit of 108 billion dong in 2010.



Do Van Trac, General Director of Sacom, said that in 2011, the company should have earned 100 billion dong more if it could have sold the real estate project on Dien Bien Phu street in HCM City.



Trac said that Sacom plans to scale down the finance investments in 2012 to focus on its main business field – making optical fiber and magnet wire. Besides, the company would also focus on the real estate projects, because the company has land in Nhon Trach of Dong Nai province.



Not only the high lending interest rates, but the exchange rate fluctuations have also caused loss to listed companies. The Pha Lai Thermopower Plant PPC lost 1262 billion dong just because of the exchange rate fluctuation, while it lost 1 trillion dong in 2010 for the same reason.



PPC borrowed 30.366 billion Japanese yen, and the value of the loan has increased due to the yen appreciation. The exchange rate announced by the State Bank on December 31, 2011 was 266.76 dong per yen, increasing by 41.19 dong per yen from December 31, 2010.



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