A difference in profits of listed companies before and after auditing has left investors worried about the accuracy of finance reports.
For example, Hoang Anh Gia Lai Group (HAG) has released a biannual finance report reviewed by auditors which showed that the group’s post-tax profit is 55 percent lower than in the finance report made by the group made itself.
Ernst & Young Vietnam had requested the adjustment of figures, including the increase of COGS (cost of goods sold). The auditor also expressed doubts about the ability of HAG to continue as a going concern.
The report showed that the accumulative loss by the end of June 2021 had increased by VND1 trillion compared with the beginning of the year.
This is not the first time HAG has seen a big difference in revenue and profit before and after auditing. In late February, HAG recorded an accumulative loss of VND5 trillion carried forward from the past after retroactively reporting losses caused by an increase in provisions against bad receivables, which caused a loss of one third of stockholder equity.
In a 2019 audited finance report, Ernst & Young Vietnam said it could not collect enough appropriate evidence to assess the capability of collecting the debt of VND5.669 trillion (as of December 31, 2019) out of the short- and long-term receivables of VND10.505 trillion.
HAG’s 2017 profit also decreased considerably after auditing. The net profit shown in the audited report was VND70 billion instead of VND629 billion. In early 2017, HAG retroactively adjusted 2016’s business results, related to the deal of selling HAGL Sugar.
After auditing, the TanTao Investment and Industry JSC (ITA) saw a six-month profit drop of 21 percent because of an adjustment related to an increase in business administration costs.
Dong A Plastics (DAG) turned from a profitable to loss-making enterprise in the half-year audit review because revenue decreased after the adjustment, while the cost price and General and Administrative Expense (G&A) increased.
A number of listed companies have seen big changes in business results in the past. Hiep Phuoc Industrial Zone JSC turned from an enterprise with profit of VND200 billion into one with a loss of VND800 billion after its finance report was audited in 2019.
ACV saw a post-tax profit drop of VND380 billion in its 2017 biannual finance report that was reviewed. NTACO in 2015 took a loss of VND426 billion instead of making a profit of VND30 billion.
The shares of enterprises providing inaccurate information are not attractive to investors, and their prices are low in the stock market.
HAG shares of Hoang Anh Gia Lai have been hovering around VND2,500-6,500 per share in the last three years and are now traded at VND5,100 per share, just one third of the nominal value. The price level is much lower than the peak VND40,000 per share seen in 2008-2009, when boss Duc was recognized as the richest stock billionaire.
ITA shares have been hovering around VND2,000-9,000 per share in the last three years, though Itaco operates in a very hot industry in Vietnam – industrial real estate. Itaco has huge projects capitalized at billions of dollars. At this moment, the shares are traded at VND7,300 per share.
DAG share prices of Dong A Plastics are between VND4,000-7,000 per share in the last three years, now traded at VND5,500, a very low level if compared with other plastics companies such as Binh Minh Plastics (VND54,500), Hoa An (VND49,000), Dong Nai Plastics (VND20,000) and Tien Phong Plastics (VND51,600).
Explaining the breach of loan commitments and the doubts about the ability to continue as a going concern, HAG said the group expects to generate cash flow from partial liquidation of financial investments, debt collection and from ongoing projects.
The company is working with lenders on adjustments of the breached terms of loan agreements.
Itaco is still facing difficulties. At the 2021 shareholders’ meeting, Dang Thi Hoang Yen, chair of Itaco, said the company would divest affiliated projects to gather strength on industrial real estate development, which is believed to have great potential in the future. It may give up the Kien Luong Thermopower Plant and withdraw from resort projects in Phu Quoc and Da Lat.
The Vietnamese stock market is hot at the moment with a high number of new investors joining the market over the last 1.5 years. In the first six months alone, 620,000 new accounts were opened by domestic investors, higher than the total accounts opened in 2020 and 2019 combined.
Vietnam trade to climb to new peak
Vietnam’s trade could reach a record high of $600 billion in 2021, the Ministry of Industry and Trade has said.
This would be 10 percent higher than last year as against a government target of 4-5 percent, it said.
It had reached $510 billion as of Oct. 15 with a marginal deficit.
Vietnam, which has been recording a trade surplus for years, has been suffering a deficit this year as social distancing and travel restrictions imposed to curb the spread of Covid-19 hurt exports.
So the final value would be dependent on curbing Covid-19 and recovering manufacturing and exports, the ministry said.
If there are no more major outbreaks in the remaining months and southern-based companies regain their growth momentum, the deficit could be wiped out and there could even be a surplus, it added.
Several large FDI plans announced recently seem to substantiate the ministry’s forecast.
South Korean electronics giant LG Display in August announced an additional investment of $1.4 billion in its manufacturing facility in Hai Phong this year.
HDBank affirms position among top 5 prestigious banks in Việt Nam
HCM CITY — HDBank has once again been honoured as one of the most prestigious private institutions in the country by Vietnam Report, affirming its position as among the most dynamic banks in terms of growth.
The award was presented at the Vietnam Top 50 Public Companies (VIX50) in 2021 ceremony organised by Vietnam Report on October 21 in Hà Nội.
Techcombank, ACB, VPBank, and TPBank also won awards.
The awards were based on three criteria: financial capacity as shown in the latest year’s financial statements; communications prestige assessed by media coding method; and surveys of relevant stakeholders done in June 2021.
HDBank did well in all three criteria.
Its positive business results in the first six months of 2021 was a bright spot.
Overcoming the adverse impacts of the COVID-19 outbreak, HDBank achieved 82 per cent of its full-year profit target in the first nine months.
Its total assets as of September 30 were worth over VNĐ346 trillion (US$15.2 billion), up 26.7 per cent from a year earlier.
Return on equity (ROE) was 24 per cent compared to 21.1 per cent in September 2020. The capital adequacy ratio (CAR) and liquidity were maintained at high levels, with CAR (according to Basel II) at 13 per cent, far above the minimum requirement of 8 per cent.
The bank’s total operating income in the first three quarters topped VNĐ12.1 trillion ($532.3 million), 23.6 per cent up from the same period last year. Operating costs continued to be optimised with the cost to income ratio reduced to 39 per cent from 43.8 per cent a year earlier.
Its standalone and consolidated non-performing loan ratios were below 1 per cent and 1.4 per cent, both lower than in a year earlier.
Services continued to be its bright spot in the first nine months, as net income rose 88.6 per cent year-on-year.
Notably, net income from services for the parent bank more than tripled from the same period last year thanks to growth in the bancassurance and payments services segments.
This helped HDBank develop in a more comprehensive way, no longer depending on credit while minimising risks and improving the revenue structure in a sustainable manner.
In the first nine months of the year, HDBank actively undertook digital transformation to promptly meet the transaction needs of customers in the context of the pandemic.
To help prop up the economy, since the pandemic outbreak HDBank has earmarked over VNĐ42 trillion to support individual and corporate customers.
Besides preferential interest rates, the bank has also offered support in terms of waiver and reduction of various fees.
In August, it won the Best Bank and Best Digital Transformation Bank in Vietnam in 2021 awards at the Global Brand Award. —
Covid-19 pandemic and the goal of 1.3-1.5 million enterprises by 2025
The target of having 1.3-1.5 million enterprises by 2025 may be difficult to achieve as many obstacles and the Covid-19 pandemic have affected business seriously. A strong recovery and reform program is needed to encourage Vietnamese businesses.
In early 2021, the Government assigned the Ministry of Planning and Investment to develop a resolution on enterprise development for the period of 2021-2025, with a vision to 2030, which targets 1.3-1.5 million enterprises by 2025.
According to the Vietnam General Statistics Office, by the end of 2020, the country had about active 810,000 enterprises. To achieve the target, Vietnam must have 100,000-150,000 new businesses coming into operation annually.
This year, due to the heavy influence of the Covid pandemic, a large number of enterprises has withdrawn from the market. It is estimated that by the end of 2021, the number of active businesses will be lower than that of 2020. The question is the target will be fulfilled?
Unified anti-pandemic policy needed
Entrepreneurs complain that with the policy “each locality is a fortress to prevent the epidemic”, many provinces have prioritized the fight against the epidemic with the desire to achieve “zero Covid-19” and this has affected business and production operations.
In many localities, hundreds of pandemic checkpoints have been set up at entrances and highways, which have hindered circulation of goods. The Vietnam Association of Logistics Service Providers lamented that as provinces apply different epidemic prevention measures, goods transport has been seriously affected, doubling the burden on businesses that have had to struggle to survive in the pandemic.
The characteristic of production and business activities is chain connections, regardless of administrative boundaries. Therefore, when local governments apply different policies and regulations on social distancing and goods transport and some provinces even close their doors to ensure “zero Covid”, input materials cannot reach factories and goods are kept in stock. This is seen as the fastest way to push enterprises to the risk of bankruptcy.
Recent statistics from the General Statistics Office show that in January-September 2021, up to 90,300 enterprises withdrew from the market, up 15.3% over the same period of last year.
On average, 10,000 enterprises were leaving the market each month. In fact, the number may be higher because when provinces implemented strict social distancing, many businesses could not complete closure procedures.
This situation has never happened in the past 10 years. Experts estimate that from now until the end of 2021, the number of businesses that will stop operating or be dissolve will be around 120,000.
Prolonged lockdowns have hit the economy hard. However, when switching to “living with Covid-19”, there are still many obstacles. In some provinces, the risk of “sub-license” rises again, making it difficult for businesses to resume operations.
Ly Kim Chi, Chairwoman of the HCM City Food and Foodstuff Association, said that businesses are already exhausted. If local governments issue more sub-licenses and regulations that cause difficulties for business operations, enterprises will “collapse” completely.
Another challenge for business and production recovery is labor shortages, as tens of thousands of migrant workers have left cities to return to their hometowns to avoid the pandemic.
Nguyen Dinh Cung, former director of the Central Institute for Economic Management, said that in 2017 the Institute had proposed that the Government remove three quarters of the existing 4,000 business conditions. However, in official documents issued later, the Government only asked to reduce and simplify 50% of these. In 2018, ministries and branches began reducing and simplifying business conditions under the Government’s direction.
“But I don’t think that it really works because we recommended removing and abolishing, not simplifying business conditions,” Mr. Cung said. Therefore, there has been no substantive impact on the business environment, and no positive effect on enterprises. Half-hearted reform has led to the risk that business conditions are recovering.
The Vietnam Chamber of Commerce and Industry (VCCI) commented that the recent reform and reduction of business conditions and support for enterprises to enter the market has not been substantial. Ministries and state agencies claimed to have cut business conditions by up to 60%, but it is on paper only. In reality it’s only about 30-40%. The market entry procedures are still complicated and overlapping.
In 2016, the Government issued Resolution 35/NQ-CP on supporting and developing enterprises, which set a target of having 1 million enterprises operating by the end of 2020, but it failed. According to experts, the main reason is that the business environment still has many barriers for enterprises to enter the market.
Therefore, in the period of 2021-2025, if there are no drastic reforms in the business environment and to changes in behavior detrimental to production and business activities, the dream of having 1.3-1.5 million enterprises by 2025 will be unreachable.
Facing difficulties caused by the Covid-19 pandemic, businesses need a strategy to restore safe production and business activities in the new anti-epidemic state. It is important for Vietnam to take action now, to maintain its competitiveness on regionally and globally, and not to fall behind in the economic recovery process.
Economic experts said that it is necessary to take action immediately and have a comprehensive economic promotion program. Otherwise, recovery will be slow and painful.
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