A lot of listed companies reported losses for 2008
while twelve share items have been put under the state watchdog’s
control, which has raised big worries among investors. However, they
have been reassured that the situation should not be worried about too
much..


The ‘bitter pill’ from financial investments


Finance and securities companies seemed to be the ones
which suffered the most from financial investments with Bao Viet
Securities (BVS) and Kim Long Securities Companies (KLS) reporting the
loss of VND 453 billion and VND 347 billion in 2008, respectively.


The companies in other fields that made financial
investments have also incurred losses from the investments. The
Refrigeration Engineering Enterprise (REE), whose shares are considered
a ‘blue chip’ at the HCM City Stock Exchange, though profiting VND 9
billion in Q4 and got the total turnover of VND 1.1 trillion in 2008,
had a loss of almost VND 140 billion in 2008 after making provisions of
VND 467 billion for financial investments.


Meanwhile, the finance report of SAM, a cable and
telecommunication material producer showed that it suffered the loss of
VND 155 billion in Q4 2008 after making provisions of VND 205 billion
for financial investments.


Market fluctuations telling on companies


Low sales, big stocks, input material price
fluctuations, exchange rate fluctuations all were the reasons that
brought loss to many enterprises in Q4.


Ben Tre Seafood Company (ABT) saw the pre-tax profit
in Q4 down by 42.62% from Q3, Seafood Company No. 1 (SJ1) down by 34%,
while Nam Viet Joint Stock Company (ANV) suffered the loss of VND 46.4
billion in the quarter.


Rubber companies have also suffered from the sharp
sales decreases. The Da Nang Rubber Company (DRC) saw the profit in Q4
down by 75% from Q3, Tay Ninh down by 31.5%, while Thong Nhat Rubber
(TNC) incurred the loss of VND 11.1 billion.


High financial costs due to the exchange rate
fluctuations and high interest rates were also one of the reasons
behind the reported losses. Pha Lai Thermopower Joint Stock Company,
for example, lost VND 1 trillion in Q4 due to the VND/yen exchange rate
fluctuation.


Don’t be panic


Despite the losses reported by listed companies,
experts believe that the situation is nothing to really worry about.
They have advised investors to calm down as it is still necessary to
find out the reasons behind the losses and consider the possibility of
the businesses’ recovery.


REE, for example, incurred loss mainly because of the
financial investments, while its main business activities have been
going well. In January 2009, REE got the pre-tax profit of VND 20
billion, while it plans to obtain VND 1.4 trillion in turnover and
pretax profit of VND 250 billion in 2009. While making investment
decisions, investors not only consider businesses’ short term profit
but also the businesses’ potentials in long term.


Experts have also pointed out that the loss incurred
by many companies was caused not by the bad business strategies, but
rather this should be seen as the result of the global economic
recession.


Explaining the loss of VND 335 billion in Q4 2008,
Dang Thanh Tam, Chairman of the Kinh Bac Urban Development Joint Stock
Company (KBC) said that the global economic recession has made the
companies and their clients suffer. As the result, KBC and the clients
had to terminate contracts before they were due. Tam said that KBC
wants to share difficulties with the clients because it hopes to
welcome the clients again when the national economy betters off and
investors again seek workshop premises.


In related news, the HCM City Stock Exchange (HOSE) on
February 16 announced that five more share items have been put under
control, raising the total number of share items put under control to
twelve.


The share items have been put under control after the
companies reported losses for 2008. The twelve share items include
blue-chips, like REE and SAM.


The HCM City Stock Exchange (HOSE) on February 16
announced that five more share items have been put under control,
raising the total number of share items put under control to twelve.


The share items have been put under control after
the companies reported loss for 2008. The twelve share items include
blue-chips, like REE and SAM.