Moves with the market

In the second quarter of 2024 financial reporting season, Rang Dong Light Bulb - Vacuum Flask Joint Stock Company became a notable bright spot, recording an enviable growth in revenue and profit compared to the same period, reaching 39% and 23% respectively. Net income per share (EPS) also jumped to nearly VND 14,100, entering the top 5 enterprises with the highest 6-month EPS on the 3 floors.

Completing equitization in 2004 and listing on the Ho Chi Minh City Stock Exchange 2 years later, the past 20 years have witnessed many changes at Rang Dong. Sales revenue in 2023 increased 20 times, and profits were 49 times higher than before equitization. From the Rang Dong brand thermos product, remembered as a "legendary" wedding gift, to contribute to the current revenue of 2,000 - 3,000 billion VND per quarter, the Company's product structure has expanded significantly. The growth momentum comes from smart lighting projects, integrating technology for solutions in the fields of high-tech agriculture, aquaculture, etc.

On the Vietnamese stock exchange, half of the approximately 1,800 listed and registered organizations are state-owned enterprises that have undergone equitization. Not only Rang Dong, many of these have expanded their production and business activities, developed more than before listing, and have even raised capital at reasonable costs and long-term sustainability from the stock market.

Delegates discuss at the seminar “Vietnam Stock Market: New Dynamics, New Opportunities” organized by Investment Newspaper. Photo: Dung Minh

At Rang Dong, with an offering price of VND93,000/share, many times higher than the par value, the 2021 share issuance to existing shareholders helps mobilize more than a thousand billion VND, supplementing resources for factory investment and expanding production capacity.

Refrigeration Electrical Engineering Corporation (REE Corp) - the pioneer enterprise listed on the stock exchange in the first trading session (July 28, 2000), has issued shares a total of 8 times, mobilizing 2,800 billion VND for investment and development.

Sharing at the seminar "Vietnam's stock market: New driving force, new opportunities" recently organized by Dau Tu Newspaper, three great values ​​that the 24-year-old market contributes to the economy were pointed out by Mr. Bui Hoang Hai, Vice Chairman of the State Securities Commission (SSC).

Firstly, it is the strong support of the stock market in equitization, improving the operational efficiency of state-owned enterprises.

Second, it would be difficult for Vietnam to have many large economic groups, ranking in the top 500 in Southeast Asia as it does today, if it only relied on initial capital contributions from shareholders or bank loans.

Third, along with the development of the times, the stock market puts forth requirements and incentives for businesses to grow in quality while aiming for sustainable development.

“The stock market over the past 24 years has been a place to spread the spirit of fair and transparent business. With encouragement from policies, the market has also influenced production and business activities towards increasing social responsibility, implementing ESG standards, thereby contributing to the sustainable growth of the economy,” Mr. Hai emphasized.

Add incentive mechanism for “bright gems”

After 24 years of operation, although still quite young compared to some markets in the region such as the Philippines, Thailand..., the Vietnamese stock market has recorded maturity not only in terms of capitalization (currently about 300 billion USD), but also in terms of the number of investors and market liquidity. The number of stock codes on the floor has reached 1,800.

Recently, the domestic sector has not grown much, credit growth has not reached the expected level, causing Vietnam's overall growth to fall short of the plan. I have a feeling that some investors are still considering, leading to poor investment. However, the current world situation is favorable for Vietnam. I think that people and businesses must be bold in investing.

Vietnam is peaceful and is a major export destination to the world. Major countries are facing each other in the vortex of fierce geopolitical competition, but Vietnam is fortunate to have its own "escape" thanks to a certain advantage in the investment shift trend.

Mr. Dang Thanh Tam, Chairman of the Board of Directors of Kinh Bac Urban Development Corporation - JSC

Of which, the number of enterprises on the UPCoM floor is slightly higher, with only 729 stocks and fund certificates on HoSE and HNX. The story of transferring floors for many years has been an interesting "catalyst" promoting stock price growth, but only a modest number of enterprises have been transferred. Many large enterprises on the UPCoM floor are industry leaders, have good business operations and have plans to move to the listed floor, but have not yet realized the policy, such as the case of Binh Son Refining and Petrochemical Joint Stock Company (BSR), 8/9 of the listing conditions are met, profits or ROE are much higher than the required level, but still encounter problems because the subsidiary has overdue debt.

From the observation of the management agency, Mr. Hai said, partly it comes from the will of the enterprise and partly because the enterprise has not met the standards to transfer the listing floor. In the case of BSR, Mr. Hai added that the enterprise itself has a direction to handle the problem.

Not only the story of changing floors, in recent years, the initial public offering (IPO) and new listing activities have been very quiet. According to Ms. Le Thi Le Hang, Strategy Director of SSI Securities Company, a limitation often pointed out by foreign investors is that the market does not have many new options. Even if foreign investors want to allocate a lot, they will have to wait for new "goods" or wait for more foreign "room".

In an effort to encourage businesses to go public, the State Securities Commission is reviewing regulations and plans to amend Decree 155/2020/ND-CP to integrate IPO and listing activities. According to Mr. Hai, after the regulations are amended, businesses can list almost immediately after implementing the IPO, much shorter than the current 3-month period. This change will remove barriers when investors buy shares from the IPO issuance but cannot trade immediately.

The wave of bringing subsidiaries following their “parent” companies to the stock exchange was announced by many businesses at this year’s annual general meeting of shareholders, such as the plan to IPO Masan Consumer, bring Vinpearl to the stock exchange, most recently MocChau Milk has completed the transfer of the stock exchange, BCG Energy - a subsidiary of Bamboo Capital Group has just been approved to register for trading on UPCoM... is expected to bring new stories to the market.

An incentive mechanism to bring more good “goods” to the market is necessary, thereby adding investment options to not only attract and retain foreign capital, but also attract more domestic capital to the market, before the opportunity for Vietnamese stocks to be upgraded from a frontier market to an emerging market.

Need consensus

In the Draft Circular amending 4 circulars, in order to promote the upgrading process, in addition to the solution to make transactions of foreign institutional investors more convenient by removing the bottleneck of margin requirements, another important content is to create conditions for foreign investors to have equal access to information. To do this, changes are needed from the listed companies themselves.

According to the roadmap, listed organizations and large-scale public companies are expected to simultaneously disclose in English from January 1, 2025, initially with periodic information and continue to add extraordinary information from the beginning of 2026.

The above regulation is applied in many countries and is also encouraged in Vietnam. However, in reality, up to now, the number of enterprises publishing information in English is only about 80 units, mostly concentrated in the group with export activities and large enterprises.

It will not be easy to apply information disclosure in English on a large scale. However, as in the early stages of the market, the demand for information transparency was a pressure that created the current generation of listed companies.

Recently, the VNCG50 Initiative - a gathering of 50 pioneering Vietnamese enterprises and a commitment to ensuring good corporate governance practices, aiming to shorten the gap in corporate governance between Vietnam and ASEAN was announced. There have been pioneering enterprises and are ready to conduct corporate governance beyond compliance, for the further goal of business development.

Having been involved in the market since the early days, Ms. Nguyen Thi Mai Thanh, Chairwoman of the Board of Directors of REE Corp, believes that the stock market is a place to "train" listed companies to do business more properly, transparently, and responsibly, while also honing professional managers and striving to keep the company's value constantly increasing.

In addition to the more difficult requirements of being part of the stock market, businesses are facing challenges from the uncertainty of the business environment.

For many years, the world economy has faced many unstable factors, posing greater challenges for business leaders. From the perspective of a listed enterprise operating in the industrial park real estate sector, having the opportunity to interact with investors from many countries, Mr. Dang Thanh Tam, Chairman of the Board of Directors of Kinh Bac Urban Development Corporation - JSC (KBC) feels the whirlwind of fierce economic competition in major markets. However, according to him, Vietnam still has the opportunity to expand investment and expand the market. From the existing foundations, along with positive export activities and a stable socio-political and macroeconomic situation, Vietnamese enterprises can take advantage and be more bold in investing to benefit from economic waves.