Property firms add to increasing share glut

Quoc Cuong Gia Lai debuted 60.1 million shares, code QCG, on the Ho Chi Minh Stock Exchange (HoSE) on August 9 at VND42,500 a share, with a trading band of 20 per cent in the first trading day, becoming the 280th stock on the bourse.

Institutional investors have a 29.42 per cent stake in QCG with foreign investors holding 13.56 per cent. The remaining 70.58 per cent belongs to individual investors, according to its listing documents.

QCG said it targeted VND360 billion ($18.9 million) in net profit on VND1.08 trillion revenue ($56.8 million) this year, surging 194 and 229 per cent on-year, respectively, from VND123 billion net profit and VND329 billion revenue in 2009.

Also on August 9, Cotec Investment and Land-House Development Company debuted 10 million shares, code CLG, on the HoSE at VND42,000 a share.

CLG targeted VND80.108 billion ($4.2 million) profit this year, the firm stated on HoSE’s website. CLG made VND8.493 billion ($447,000) net profit in 2009, soaring 273 per cent against 2008.

The QCG and CLG listings came amidst concerns over a glut of new shares. “Strictly speaking, these new listings are not dilutive by themselves but they are the visible tip of the supply iceberg so to speak. And the much longer list of equity raisings and corporate bond issuances standing behind them is simultaneously capital absorptive and quite dilutive,” said a senior analyst with Ho Chi Minh City Securities Corporation (HSC).

Around 1.3 billion shares will be listed on HoSE in the coming months, of which listing dates of around 233 million shares have been decided this year, additional 265 million shares have been approved in principle and 813 million shares are registered to debut, according to HoSE statistics as of July 30. 

“Numerous capital raisings and new listings until the end of the year that could disturb the balance between demand and supply are among all reasons why investors prefer to move to the sidelines and wait for better days ahead,” said the HSC analyst.

Among the new listings, there are several big names like Military Bank with 530 million shares, Vietnam Sea Transport Company (140 million shares), Phat Dat Property Developing Company (130 million shares), PetroLand (100 million shares) and IDICO Long Son (83 million shares).