Kim Long Securities’ exit shakes market to the core

What is the key reason behind the company’s decision to withdraw from securities business and what  does management think about the possibility of shareholders voting against the decision?

One essential reason is that the company’s management wants to use capital sources more cost-efficiently.

Currently, the company has in ownership VND1.8 trillion ($86.9 million) worth of cash deposited at banks, over VND200 billion worth in listed firms’ shares and another VND250 billion in non-listed firms’ shares. The change in operational model would help us save costs and have more time for in-depth studies to direct investment into potential projects or businesses.

Anyhow, I would like to confirm that the company’s decision to withdraw from securities trading and embrace new business fields was only the management’s intention, while the shareholders meeting, slated to take place on March 19, will hold the decisive role.

If shareholders vote against the decision on alteration of business lines, we will still remain a securities firm.

There exists a rumour that changes are taking place at Kim Long Securities Company to prepare for a new model? Is this true?

The company will keep operating as usual without any changes. We still operate our routine securities services and fully handle information reporting obligations of a securities firm towards the stock market management authorities and relevant government agencies.

Any change, if it happens, will occur based on the stockholders meeting’s final decision.

Until present, change of business lines was only the company’s management intention.

What are your comments on the stock market’s view of Kim Long Securities’ alteration of business lines and how it will impact on investors’ sentiments?

The decision draws the market’s particular attention might be because Kim Long was the first securities firm to move this way.

In fact, it is quite common for a joint stock company to change business lines since the core target of any joint stock firm is to embrace the fields which could bring optimal profits to shareholders.

Kim Long is managing nearly 10,000 investor accounts and investors in fact are doing transactions at the company as usual. Investors keep filling their accounts with more money to buy stock and from early March only 19 investors asked for closing their accounts at Kim Long to shift to another securities firm.

KLS shares were sold extensively on the Hanoi bourse after the company’s management unveiled the intention to withdraw from securities trading. Why is this?

The share price is decided by the supply and demand factor and also depends on investors’ sentiments.

In this case, I hope investors would be calm since Kim Long Securities’ current financial status is good as we mainly hold cash in bank accounts. The company runs at profits in the first quarter of 2011. Its book value by end of 2010 was VND11,428 per share based on the 2010 audited financial report. If the change in business lines is  not supported by shareholders, we will advance efforts to continue operating as a securities firm.