The fiscal year is ending, but several companies have
just announced adjustments of their turnover and profit plans for this
year, surprising shareholders with big adjustments. Are the late
announcements the result of poor forecasts by enterprises or were they
deliberately delayed to prevent share price decreases?


Construction Joint-stock Company No 5 (SC5) has
announced its 2008 turnover plan of VND818bil is kept intact, but the
targeted pre-tax profit has been lowered to VND40.48bil from VND87.2bil.


Invesco, an investment and construction development,
has lowered its targeted production value from VND660bil to VND480bil,
targeted turnover from VND570bil to VND400bil, and pre-tax profit from
VND30bil to VND17bil.


Vinaconex 11, a construction company, has cut its 2008
turnover target from VND500bil to VND380bil, and post-tax profit from
VND22bil to VND13.2bil.


It has come as quite a surprise that these companies
did not begin consulting with shareholders about adjustments of
production and business plans until December. UIC, an investment and
urban development company, is another example. It is asking for
shareholders’ opinions about the lowering of its post-tax profit target
from VND19.48bil to VND13.172bil, and dividends from 15% to 13.5%. It
announced that the collection of opinions would last from December 10
to December 22. When will the company make a final decision on the
adjustment then?


Explaining the adjustment of its business plan for
this year, a representative of SC5 said that earlier this year, when
drawing up the 2008 business plan, the company anticipated that fuel
and construction material prices would increase in 2008, which prompted
the company to ask partners to sign open contracts (contracts which
allow for adjustments of material prices in accordance with price
increases in the market).


However, the company could not anticipate other
changes. Bank interest rates increased sharply, high petrol prices were
kept for a long time, and the wages the company has had to pay have
increased from VND40-50,000 to VND120-150,000 per day. All these
increases have led investment costs to skyrocket. As a result, the
company thinks that it will still be able fulfill its turnover plan,
but not the targeted profit one.


Why has the company just announced its new targets
recently? The representative said that even in Q3, the company still
believed it would be able to fulfill the plan thanks to the open
contracts. However, the company is now sure that the previously set
profit target is impossible, and that the more realistic profit goal is
VND40bil.


“We have made the announcement so that shareholders
know exactly how much profit we will earn this year. We want to provide
updated information for investors; the tardiness in making the
announcement should not be seen as a deliberate action,” he said.


Vietcombank, one of the biggest banks in Vietnam, has
also consulted with shareholders on adjusting its 2008 business plan.
The total assets of Vietcombank are expected to see a decrease of
VND9tril to VND200tril, the credit growth rate is expected to reach
only 15%, while the capital mobilisation growth rate 0%.


A member of Vietcombank’s board of directors said that
the bank believes it will still be able to fulfill the planned profit
target, but fail to fulfill the plans on capital mobilisation and
non-performing loans.


In fact, investors well understand the reasons why
listed companies have to adjust their business plans. However, Nguyen
Hong Quan, acting Director of An Binh Securities Company, said that in
general, companies do not adjust business plans in the ‘last days of
the year’ as this affects investors.


Nguyen Thi Hoang Lan, Deputy Director Hanoi Securities
Trading Centre (HASTC), also said that it is quite normal for companies
to adjust their business plans. However, companies need to announce
target adjustments earlier in order to help investors make the right
decisions.


Lan said that listed companies should change their
viewpoints about information exposure. Enterprises tend to conceal
information about labour-cost cuts and production decreases, which they
consider ‘bad information’. Lan stressed that investors need to be well
informed about the health of businesses, or they will seek unofficial
information in the market.