After six consecutive days of losses on the Ho Chi Minh Stock Exchange (HoSE), where it is listed, VNS is down 25 percent in December and nearly 40 percent for the year.
It had remained above VND30,000 ($1.30) for nearly four years until 2017, but began to face competition from ride-hailing firms, dubbed “technology taxis” in Vietnam, such as Singapore’s Grab.
The liquidity of what used to be a highly illiquid stock has soared, with foreign investors dumping it. Nearly half a million shares changed hands on Thursday as compared to an average this year of less than 1,000.
Dang Tran Phuc, financial advisor at VNDIRECT Securities JSC, said: “VNS is trading at a price-earnings ratio (P/E) that is relatively low compared to its historical P/E, and has cash reserves of nearly VND300 billion ($13 million) compared to its market capitalization of VND700 billion ($30.33 million). These two factors are considered attractive to investors looking to increase their ownership in the company.”
But these long-term factors cannot overcome short-term selling pressure from foreign investors, who seem to be trying to offload VNS shares at all costs, he explained.
Vinasun said revenues were steady and net profits were up 68 percent year-on-year in the first nine months of this year to VND94 billion ($4.07 million), and so the selloff reflects the market’s view of the company’s future prospects since it has not taken any measures to deal with the competition from ride-hailing businesses or to promote growth, he said.
“While the surging popularity of technology taxis and ride hailing platforms does affect Vinasun’s business, its management does not seem to have thoroughly assessed this new business model and has been relatively slow to adapt.”
Further, over 60 percent of Vinasun’s profits comes from activities outside its core business like advertising and selling off fixed assets, he said, adding fixed assets depreciate while advertising revenue could fall if clients move to online channels such as Facebook, Google and Zalo.
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