Economic difficulties take their toll on large-caps

Thursday, Apr 04, 2013 17:43

HA NOI (VNS) — Large-cap stocks have been included for the first time on the list of shares with alert status on both national stock exchanges– indicating that economic hardships have begun to squeeze even big businesses.

Late last week, the HCM City exchange placed shares of four companies under alert status due to business losses in 2012.

Three are large real estate firms: Khang Dien House Trading and Investment (KDH), Kinh Bac City Development (KBC) and Licogi 16 (LCG).

There are currently 70 stocks under alert status on both exchanges, while the number of shares under control hovers around 15.

In the past, the stocks on the "black list" consisted of only medium and small companies, but a lack of capital and high lending rates on the back of prolonged economic difficulties have pushed even big companies into losses.

KBC has never reported losses since its debut in 2009. But a surprisingly big loss of nearly VND434.7 billion (US$20.7 million) incurred in 2012 placed it under alert status for the first time.

LCG, a share with EPS (earning per share) reaching VND10,000 in 2010, also posted a loss of almost VND36.6 billion ($1.7 million) last year. Meanwhile, KDH incurred a loss of VND55.5 billion ($2.6 million) during the same period.

In theory, big companies should have enough capital to survive for a few years during an economic crisis, but prolonged economic difficulty, particularly the stagnant real estate market, has exhausted their capital. Revenues are not big enough to offset these costs.

Executives of Licogi 16 said the company would sell any of its projects if it could find buyers. This year, it sets a modest goal of no profits. In the projected worst-case scenario, the company would see losses of VND94 billion ($4.5 million) and no dividends.

Licogi 16 shareholders took responsibility for weak management during a meeting last week, saying they also failed to accurately predict the speed of development on the market. The company is determined to restructure and improve management.

KBC and KDH has yet to announce the date of their shareholders' meetings but investors expect these companies will soon announce specific plans to help them overcome the current difficulties. — VNS

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