June 26 is the deadline for the investors who won the right to buy Bao Viet shares at the May 31 auction to pay for the shares. However, analysts have said that many investors will ‘give up the game’, and Bao Viet may have to put the shares into auction once again.
An official from a securities company said that Bao Viet shares were being traded at VND68-70,000/share and very few transactions had been successful due to the low demand for Bao Viet shares.
An investor on Seabank trading floor said that he had offered 6,000 Bao Viet shares for sale at ‘soft prices’ but he could not find buyers.
At first, right after the auction, Bao Viet shares were offered at very high price levels, VND82,000/share. However, the prices have been decreasing since then, and the closer the time comes to the day for making payment, the more the prices of Bao Viet shares are decreasing.
In another happening, on June 26, 2007, the Hanoi Securities Trading Cenre (HASTC) will hold an auction of 10mil shares of PetroVietnam Insurance Company (PVI). The starting price of PVI shares is VND50,000/share.
PVI’s main business field is non-life insurance, including re-insurance. PVI now accounts for 18.3% of the non-life market share, making it the third-largest market share holder. If considering their growth rates, PVI is a better option than Bao Viet; therefore, analysts have said that investors will ignore Bao Viet shares to inject money in PVI.
Analysts also say that if Bao Viet shares are priced at VND69,000/unit, the P/E would be 89.54, which means that Bao Viet’s profit growth rate is not high. The high P/E index proves to be unacceptable for serious investors.
The VND69,000/share price level would only be acceptable if Bao Viet could obtain a very high growth rate of 35-40% this year. However, analysts have said that the maximum growth rate the insurer will record will be 18-20%.
It is the opinion of experts that Bao Viet made IPO in unfavourable conditions, when both the OTC and official market were down. That explains why the share price did not increase as expected, and in fact has been decreasing considerably.
Some other analysts said that the newly released decision by the central bank on limiting the amount of loans given for securities investments has made the prices decrease. Investors cannot access bank loans as easily as they could do previously, and when the capital flow to the stock market decreases, the prices of shares, including Bao Viet’s, also decrease.
Source: VNE
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