Strong winds knock firms off their targets

PetroVietnam Securities (PSI) - illustration photo

According to PetroVietnam Securities (PSI) chairman Bui Ngoc Thang, the firm intended to source shareholder approval to lower its 2011 profit targets due to the unfavourable economic climate.

In late 2010, PSI’s general shareholder meeting adopted the firm’s 2011 profit target of at least VND102 billion (around $5 million), a little more than 2010’s profit figure of over VND100 billion.

PSI is not a single case. The general director of a medium-size securities firm with VND200 billion ($9.7 million) in chartered capital recently set 2011 profit target of VND1 billion ($48,000). He said given the stock market’s ailing performance, not running at losses would be a great task to securities firms’ management, let alone catching profits.

Royal International Securities Joint Stock Company (IRS) general director Nguyen Trong Tuan said the firm broke-even in the first five months of 2011 and that ‘fine’ outcome partly came from the fact that in 2010 IRS sold out almost stocks it self-invested and just now focuses on conventional securities services.

Like securities firms, scores of production firms incurred the same fate. Deputy general director of an import-export trading firm said the company fared well with agricultural product exports, while it faced a host of difficulties in the first half of 2011.

From March until the present, the firm focused on collecting debts since many of its partners could not source capital to pay up debts on the back of government’s credit tightening policies.

The situation is no better for construction firms who were critically hit by market difficulties. In fact, many construction firms were debtors to banks and creditors to project developers.

Lately, the management of a Hanoi-based state-owned business recently flew to the central region to demand payments of a debt from another state-owned firm. “The debt of nearly VND3 billion ($145,000) was a significant amount five years ago, but at present it just means a small sum,” said the creditor firm’s planning department head.

In another case, a construction firm director said it took almost three years for his firm to get back payments worth VND10 billion ($500,000) for building a southern university material base. The university recently asked the firm to engage in upgrading the training base, but the firm refused.

Vinaconex 2 Joint Stock Company general director Do Trong Quynh said the firm considered scaling down its 2011 business targets. Earlier, it set to achieve VND1 trillion ($48.3 million) in total revenue and VND50 billion ($2.4 million) in profit margins for 2011.