What’s the fate of 6 blue chips on HOSE?

Having the total capitalisation volume of VND120tril ($7.5bil), six share items, SJS, STB, FPT, VNM, PPC, and PVD, now account for one-third of the total listing market capitalisation.

Domestic and foreign investors always refer to the prices of the six blue chips when making investment decisions, considering these the barometer of the stock market.

Several days ago, foreign investors were given an unexpected gift: as the securities depository centre made a mistake in defining the foreign ownership ratio in Sacombank, foreign investors could freely purchase many more Sacombank shares. Though the depository centre announced its mistake, foreign investors decided not to sell Sacombank shares in order to reduce the foreign ownership ratio to 30% as required. The event shows the big attractiveness of Sacombank shares (STB).

In the last trading sessions, STB has led the market in transaction volume. However, as the market remains quiet, STB’s price did not increase, selling at VND53,000/share on August 28.

According to Bui Ngoc Tuoc, a securities expert, though STB has high liquidity and low P/E index, it has several shortcomings that may worry investors.

First, STB have been listed in the largest quantity on the market with listed 442mil, many of which have been additionally issued, and at the moments when the demand was lower than supply.

Second, STB has witnessed a lot of changes in staff, while members of management board and their relatives have continuously sold STB recently.

Third, investors still want to keep the ‘wait-and-see’ attitude as they want to know how Sacombank will perform when many foreign banks enter the market and more local banks are set up.

Mr Tuoc said that if the shortcomings could be fixed, STB would still deserve to be listed among investors’ portfolios.

Once the hottest share item on the bourse, SJS has surrendered its first position to another item though it remains influential. When Song Da Corporation (the parent group of SJS) sold 6mil SJS shares, big doubts were left among investors.

Vu Chi Tung, an investor on SSI trading floor, said that this was one of the factors that had prompted him and other investors not to keep SJS any more. “Song Da would not have sold SJS in large quantities if SJS had been actually promising,” he said.

The director of a securities company said that SJS would have difficulty retaining its previous position as the real estate boom was over. Meanwhile, several other real estate firms, which also have big competitiveness, are also going to make IPOs or list on the bourse.

The director said that the actual value of SJS would be somewhere between VND200-250,000/share. If the real estate market does not witness a new price fever, and the company does not have business plans which promise fat profit, SJS will not be able to return to the over VND300,000/share level.

Recently, Vinamilk (VNM) has revealed its intention of listing on a foreign bourse. Together with STB, VNM is a big name among the six blue chips most wanted by investors. If the government approves the raising of foreign ownership ratio, and VNM lists on foreign bourses, VNM price will skyrocket. However, there is always a big gap between expectations and reality.

FPT prices slid dramatically recently from their highest peak. Three reasons have been cited to explain the sharp price decreases 1. bad rumours about FPT, which were not addressed timely 2. TPG registered to sell a large quantity of FPT 3. Two members of FPT registered to sell a large volume of FPT also at that time. Whether FPT prices can recover in the time to come will depend on many factors, while FPT’s management board has committed not to sell shares until the year’s end.

PPC, though having the lowest P/E index among the group of six (less than 17), has the lowest price level, at VND52,500/share.

The paradox has been explained by Electricity Engineer Tran Vinh Nghi: outdated equipment and low management skills both make PPC’s value low.

Meanwhile, PVD has overly high P/E (over 74), while the new projects of the company have not shown efficiency; therefore, investors dare not inject mooney in PVD. Moreover, if wanting to make investment in oil and gas companies, investors will have more choices in the near future, when more oil and gas enterprises are equitised.