Earnings season throws up surprises

Ho Chi Minh Stock Exchange (HoSE)-listed Sacombank, one of biggest private banks in terms of chartered capital in Vietnam, reported a 2010 audited after-tax profit of VND1,906 billion ($92 million), or VND240 billion ($11.6 million) lower than the unaudited figure.

“It is our mistake,” the bank  said in a document sent to the HoSE, without explaining further. PricewaterhouseCoopers is Sacombank’s auditor.

Khang An Property Investment Company’s (KAC) 2010 audited after-tax profit saw a 37.6 per cent plunge, equivalent to VND13.5 billion ($652,000), against its un-audited result. The reason cited was that its clients suddenly canceled contracts to buy KAC land use rights.

Dong Do Maritime Company (DDM) even reported a 2010 after-tax loss of VND74.3 billion ($3.6 million), while its previously un-audited financial statements said it earned VND474 million. The differences came from financial costs, DDM said. HoSE later put DDM shares on alert status due to its huge loss. 

PetroVietnam Construction Joint Stock Corporation (PVX) also reported 2010 audited after-tax profit of VND586 billion ($28.3 million), VND43 billion ($2 million) lower than the un-audited result. 

Other firms like Pomina Steel Company (POM), Vinaship Sea Transport Company (VNA), Song Ba Company (SBA) and Tien Len Steel Group (TLH) also reported 5 per cent [VND34 billion], 9 per cent [VND4 billion], 15.5 per cent [6.15 billion] and 28.95 per cent [VND22.8 billion], respectively, lower than un-audited 2010 earnings.

This was due to incomplete provisions and wrong calculations on revenues or expenditures, according to these firms’ explanations.

Market analysts said the big differences between before and after audited results was surprising as selected auditors had to check biannual before giving out the yearly statements.

“It is more likely that these firms intentionally gave out un-audited earnings different from audited figures,” said Nguyen Quang Thuan, chartered financial analysis (CFA) holder.

Thuan said there were reasons behind the differences such as misunderstandings of auditing or regulations procedures between these companies’ accountants and directors. 

“In foreign markets, if a company gives out un-audited financial reports with huge differences, it has to make explanations to relevant market regulators to find out whether they were intentional or not,” said Thuan. 

Traders who buy the shares of these companies after the un-audited financial reports might feel disappointed, but Thuan said it was part of the game.

“Investors should defend and protect themselves, studying carefully each stock before jumping in,” he said.