HSC advances cautiously towards lifting foreign cap

At the annual general meeting last week, shareholders of the corporation (HSC) were eager to find out if the securities firm would scrap its current limit for foreign investors. This is particularly important because securities trading is not included in the list of conditional business, and Saigon Securities Incorporation – HSC’s major rival – removed its cap last year. The 49 per cent limit at HSC has been filled for a long time already, leaving foreign investors with precious few opportunities to pour capital into the firm.

However, keen investors may have to wait a little longer, as HSC executives replied that they must take careful steps with this matter and ensure that HSC encounters no setbacks when lifting the foreign cap. The firm is currently working closely with the State Securities Commission (SSC) to find the most suitable method.

“First, we’ve requested the SSC to give us more detailed instructions on this matter. Second, we’re collaborating with consultants to assess tax-related issues. Third, we’ve also asked the State Bank of Vietnam to clarify whether HSC will be prevented from overseas indirect investment if we become a foreign-owned firm. This is really important since it will affect the number of services we can offer to foreign investors,” said Johan Nyvene, CEO of HSC.

At the meeting, HSC executives also revealed that they have some mergers and acquisitions plans in mind. Takeovers are now an industry-wide trend, and so HSC is weighing up the pros and cons of acquiring as many as three securities companies. However, similar to lifting its ownership limit, the firm will move forward cautiously as it evaluates the feasibility of these deals.

In 2016, HSC will also launch services for the soon-to-come derivatives market. Johan Nyvene noted that because the derivatives market is still new, HSC will not expect to make a profit from this service until 2019. For now, the firm is focused on training its staff and improving its risk management processes.

This year, HSC aims to reach VND301 billion ($13.5 million) in after-tax profits, a 41-per-cent increase from 2015. Targets for stockbroking and margin profits also went up, but HSC is mostly betting on consulting profits, as it expects this service to grow by 209 per cent this year. One major consulting deal for HSC in 2016 is Saigon Co.op’s potential buy out of the supermarket chain Big C.

Regarding last year’s disappointing results, which saw a 43-per-cent fall in after-tax profits, HSC executives were apologetic towards investors. The firm’s leaders promised that changes in business would improve its profitability and dividends this year.