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Number of firms delisting on the rise

Update: May, 08/2014 - 09:06
Seventeen companies will have left the stock market by the end of May, as the figure is likely to rise with a dozen other companies at risk from continuous losses. In 2012, only 22 firms left the market while the number recorded in 2013 was 37. — Photo vietstock

HA NOI (VNS)  — The number of companies delisting from the stock market has increased rapidly since the beginning of this year, showing that economic woes continue to weigh on businesses.

Seventeen companies will have left the stock market by the end of May, as the figure is likely to rise with a dozen other companies at risk from continuous losses.

They include Song Da No 9.06 (S96), Quang Nam Mineral Industry Corp (MIC), Huu Lien Asia Corp (HLA), PetroVietnam Nghe An Construction (PVA) and Vietnam Ocean Shipping Co (VOS).

In 2012, only 22 firms left the market while the number recorded in 2013 was 37.

Unlike in the past when many firms decided to voluntarily delist in order to restructure, most cases this year have been mandatory because of poor business results.

Bien Hoa Concrete (BHC), International Labour and Services (ILC), Manganese Mineral (MMC), Mien Trung Petroleum Construction (PVX) and Vinaconex Transportation (VCV) were all forced to leave the market this month after posting consecutive losses for three years.

Meanwhile, companies including Viglacera Ba Hien Co (BHV), Cuu Long Seaproducts Co (CLP), Construction & Materials Trading Co (CNT), Dong Thap Trading Corp (FDG) and Yen Bai Cement and Mineral Co (YBC) were forced to delist after their losses exceeded their charter capital.

The risk of further delistings has triggered a wave of sell-offs in recent sessions with investors concerned they will not be able to retrieve their money once the companies officially leave the market this month.

PXM, expected to delist on May 15, has bottomed out in the last 19 sessions, and despite a share price of only VND1,200 (US$0.06), nobody wants to buy.

Investors have also rushed to unload BHC shares and the price has fallen for five consecutive session to just VND1,600.

According to analysts from FPT Securities Co, companies must leave the market if they post losses for three straight years or their losses go beyond their charter capital. Shareholders will suffer as the prices of these shares drop substantially, and in the worst case, nobody wants to buy them. — VNS

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