Securities Companies Jump High with Market

Bao Viet Securities Company (ticker BVS-HNX) has announced the business result in the third quarter and the first nine month of 2009. According to the brokerage house, the third quarter revenue reached VND108.22 billion, totalling nearly VND200 billion in the first nine months ending September 30. This is one of profit-making securities brokers when the stock market is experiencing a long hot rally.

 

Many securities companies made handsome profits from the return of provisions which were set aside for stock devaluation when the market slumped.

 

According to Bao Viet Securities Company, with the return of provisions of over VND60 billion, the company’s net profit amounted to VND217.4 billion in the first nine months of 2009, compared with a loss of VND296.97 billion in the same period of 2008. In the third quarter ending September 30 alone, the profit was VND122.57 billion. Earnings per share (EPS) was VND4,815 in the first nine months, including VND2,714 in the third quarter.

 

“Realisation of portfolios at prices higher than the rate with devaluation provisions in late 2008 helped increase the return of provisions in the third quarter. This contributed a handsome proportion to business results of HSC in the first nine months of 2009,” a representative from Ho Chi Minh City Securities Corp (HSC) said.

 

Saigon Securities Incorporation (SSI) reported its provision return amounted to nearly VND254 billion. According to the consolidated financial statements, the company made VND355.5 billion in net revenues in the third quarter, more than the amount of VND304 billion in the first six months of the year. The stock broker reverted more than VND103 billion from provision funds in the third quarter, bringing the total amount of returned provisions to VND254 billion since the start of the year. The accrued nine-month profit after tax was VND536.2 billion.

 

Like biggies, smaller brokerage houses also made big profits. In the first nine months of 2009, Thang Long Securities Joint Stock Company (TSC) reported revenues of VND422 billion and profit of over VND109 billion in the first nine months. Viet Dragon Securities Corp (VDSC) also earned pre-tax profit of VND36 billion, equal to 106.5 % of the full-year plan of VND33.8 billion. In the third quarter alone, VDSC attained a pre-tax profit of nearly VND41 billion, up 31 % from the second quarter.

 

The market rally created favourable conditions for securities companies to revise up earnings and increase the capital to expand operations. Since early September 2009, the Board of Directors of Bao Viet Securities approved the plan to revise up revenues from VND160 billion to VND195 billion and profit before tax from VND19.5 billion to VND145 billion. By the end of September, the company’s profit has already surpassed the revised target by 50 %.

 

The Board of Directors of Bao Viet Securities also approved the plan to increase the chartered capital from VND451.5 billion to VND722.4 billion in 2009. The top brokerage house will set up plans for hike the chartered capital to at least VND1,000 billion in 2010 and VND1,500 billion in 2010 - 2012.

 

Apart from BVS, many other securities companies also advanced their business development plans with capital increase given priority. Thang Long Securities Joint Stock Company (TSC) has revealed the plan to raise the chartered capital from VND420 billion to 650 billion; Tan Viet Securities Joint Stock Company (TVSC) from VND128 billion to VND350 billion; Vietnam Securities Company from VND45 billion to VND100 billion, Kim Long Securities Corp (KLS) from VND600 billion to 660 billion. Agribank Securities Company (Agriseco) also planned to issue 120 million shares to double its chartered capital from VND1,200 billion to VND2,400 billion.

 

The capital raising plans have already prepared by securities and the current market condition is seen as the golden time to realise. This will also create a resonant effect on the stock market and help improve the investor sentiment.

 

The State Securities Commission (SSC) said it continued receiving new applications for capital increase from securities companies. However, SSC warned securities companies of suitable, transparent and equitable use of the money mobilised to boost the market. The capital raising will cause negative impacts on shareholders if the market has not really gained sustainable growth.

 

Moreover, without careful capital using plans, the capital rise may cause heavy burdens on the companies and negative impacts on investors if their business activities are not good and the market is volatile. Even, if the market does not recover as quickly as expected, the large capital size will be a burden on returns for investors.