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Surprised investors
For example, Saigon Securities Company (SSI) income and after-tax profits reached VND 1,846.3 billion and VND 667 billion, respectively. This is an increase of almost twice compared to the same period in 2020. For the nine cumulative months of 2021, SSI recorded a total turnover of VND 5,091.1 billion, up by 53.3%, and pre-tax profit reached VND 2,062.6 billion, up 91.8% compared to the same period in 2020. With this result, SSI exceeded 12% of the profit plan for the whole year in just nine months.
Likewise, Ho Chi Minh City Securities Company (HCM) reported third quarter business results with revenue of VND 906 billion, up 128%, and pre-tax profit of VND 397 billion, in 127% increase. In nine months, HCM recorded net sales of VND 2,411 billion, an increase of 124%. HCM has also achieved 90% of the annual plan. Its pre-tax profit was over VND 397 billion, up 135% and achieved 96% of the entire plan. According to statistics, nine-month earnings per share (EPS) reached 3,027 VND. Return on Total Assets (ROA) and Return on Shares (ROE) were 5.9% and 19.3%, respectively.
Previously, Viet Rong Securities (VDS) reported trading results for the third quarter and nine months of 2021 with a growth rate of more than triple digits. Specifically, VDS recorded a turnover of 227 billion VND, up 153%, and cumulative over nine months reached 761 billion VND, up 193%. VDS also achieved 144% of the entire annual plan. Third-quarter after-tax profit reached VND 73 billion, up 98%, and the cumulative nine months reached VND 320 billion, up 539%, and completed 222% of the 2021 plan. ‘be the highest profit made by VDS since its inception. This was due to the huge third quarter profit of VDS of 698 VND and accumulated over the last four quarters at 4,163 VND.
Notably, the list of securities companies reporting profits in the third quarter also saw the presence of troubled securities companies. Many securities companies manage to cope with the losses of previous years, such as DongA Securities Company (DAS), Saigon Thuong Tin Securities Company (SBS) and APG Securities Company (APG).
Stocks fall sharply
Arguably, the impressive business results of the group of securities companies are not hard to explain, especially in the context of everything backing securities companies. The first is that the transaction value of the market has increased several times over the same period last year. Specifically, the average daily value of transactions in the third quarter reached $ 1.1 billion, up 316%. This was the quarter with the highest number of new account openings with 337,000 accounts. The second factor is that margin loans continue to grow as securities companies simultaneously increase their capital to take advantage of this attractive source of income. Against this backdrop, analysts recommend investors to shell out in this group of stocks pending third quarter trading results.
Everything is in favor of securities, but in fact, these values ​​are continually falling to the surprise of investors. Many stocks even fell sharply, even as the closing date for the list to receive the right to buy free shares was approaching, as in the case of HCM. This stock code has been continuously sold by investors and its price has been reduced until the ex-right date to buy additional shares, to 14,000 VND per share. This offer price was well below the market price before the ex-right date of over 50,000 VND per share, but investors sold anyway. The selling pressure ahead of the closing date for the list of shares eligible to receive shares has also occurred with many other securities companies, including SSI. This stock market code went from 63,000 VND per share to only 60,000 VND before the ex-rights date.
For joint-stock companies that do not have free share activities during this period, the drop is even more significant. According to statistics, stocks in the securities industry suffered an average price decline of 15% to 30% during the fall in October. Although this industry group rebounded in the October 27 session when the VN-Index set a historic milestone, many investors still suffered losses.
High expectations
Commenting on the recent drop in prices of the securities group, a senior investor in the stock market said that the securities group adjusted after rising too high and many stocks rose two to three times a year. report at the start of 2021. With the vague rise, in addition to expectations for trading results, which are clearly stated in the third quarter financial statements, the bullish wave also comes from a greater expectation for the future when the T0 transaction was implemented in 2020. However, not all securities companies benefit from it. from T0 transactions. Indeed, only the large brokerage firms, occupying a significant share of the brokerage market, are the main beneficiaries of T0 transactions. With smaller securities firms, the competitive pressure will be stronger as more and more foreign-invested securities firms enter the market.
In particular, the emergence of foreign securities companies is also putting pressure on domestic giants. According to an executive of a national securities firm, international experience helps foreign securities firms have the conditions and the ability to access new products more quickly, while financial potential is a factor that helps foreign securities companies to be stronger and more daring to turn into weak stocks. affordable and attractive products and services to attract customers.
Investors expect too much of the industry group, and many people even expect this growth to continue, according to another executive at a securities firm with private equity from South Korea. Investors are optimistic about the long-term outlook for the Vietnamese capital market, and that’s why they’re here. Although the market does not go up forever as the securities industry is a capital intensive business, it is trading at an average P / B of 3.6x and an ROE throughout the cycle is 11% at 15 %. This is the reason why investors can find better opportunities in other more attractive sectors.
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