Firms count cost of dire economy

Even companies outperforming in their sector are struggling, with Vinh Son-Song Hinh Hydropower (VSH), Dong Phu Rubber (DPR), PetroVietnam Low Pressure Gas Distribution (PGD), Hau Giang Pharmaceutical JSC (DHG), and banks Asia Commercial Bank (ACB) and Vietinbank (CTG) posting poor results last week.

Vinh Son-Song Hinh Hydropower’s revenue abated 21 per cent year-on-year due to lower selling prices to electricity distributor Electricity of Vietnam (EVN),  pushing profits off by 21 per cent. Dong Phu’s third quarter revenue sank 26 per cent against 2011’s same period on low demand for rubber products, resulting in a 30 per cent decline in gross profit year-on-year.

Even Hau Giang Pharmaceutical, one of the largest medicine producers in Vietnam, saw its net third quarter profit down 2.4 per cent, although revenue significantly increased 25.7 per cent.
Once profitable PetroVietnam Low Pressure Gas Distribution (PGD) also turned heads with some eye-wateringly bad results.

PGD posted a VND226 billion ($10.9 million) loss in the third quarter of this year, compared with a VND77 billion ($3.7 million) profit in 2011’s third quarter and a VND383 billion ($18.5 million) profit in 2012’s second quarter, with explanation that parent company PetroVietnam Gas had increased input gas prices  during the quarter. Although the company said it could still complete the whole year’s plan, investors still strongly dumped shares.

“I and my trading team got serious losses due to such unexpected news and it strongly hurt my confidence in its business model. I’ve sold all PGD shares and don’t want to invest more in gas tickets at the mean time,” said Tran Hao, a Ho Chi Minh City-based investor.

Meanwhile, major banks continued struggling in line with investors’ expectations. Asia Commercial Bank (ACB) announced that profits in 2012’s nine months dropped 57 per cent on-year due to gold exposure causing big losses. Vietinbank fulfilled just 65 per cent of the year’s profit target.

Gross demand dipping and enterprises struggling to access cheap loans have proven a deadly cocktail for many firms. Major real estate PetroVietnam Construction (PVX), Vietnam Sacomreal (SCR), Licogi 16 (LCG) and Quoc Cuong Gia Lai (QCG) all showed third quarter big losses.

There are still a few companies posting higher-than-expected profits thanks to some extraordinary factors, such as PetroVietnam Gas (GAS) seeing its profit surging 27 per cent on-year within the quarter thanks to a surge in selling gas price.

GAS’ spokeswoman Hoang Da Thu said PetroVietnam Gas faced pressure from the lower demand for gas from its customers including electricity, fertiliser and other industrial enterprises.
GAS gained 1.5 per cent on October 23 as it announced the result, but soon fell in the next session on locking profit pressures.

“Currently, risk appetite is still weak as investors are hesitant and remain on the sidelines. As such, the market may trade sideways in the coming sessions,” said Viet Capital Securities in a note to clients.

The VN-Index lost 6.5 points or 1.6 per cent last week. The average matching value of Ho Chi Minh Stock Exchange (HoSE) sunk to new low level of VND315.2 billion ($15.2 million) each session, compared with the level of around VND463.4 billion ($22.4 million) per session in  the previous week.