FLC Joint Stock : Stock market should become key capital-raising channel

The conference on optimal investment strategy in the stock market boom organized by the BizLIVE newspaper with FLC Group's sponsorship took place on May 13 in the FLC Quynhon Beach & Golf Resort complex. The event drew the participation of 500 senior representatives from investment funds, real estate companies, banks, individual investors as well as leading economists and equity experts.

Present at the conference were Nguyen Son - Chairman of the Vietnam Securities Depository, Tran Du Lich - parliamentarian from Ho Chi Minh City of the XIII legislature, economist Le Dang Doanh, finance-banking expert Nguyen Tri Hieu, securities experts Huy Nam, economist Ngo Tri Long, Lam Minh Chanh - Chairman of LMC Investment and Commerce Company, finance expert Dinh The Hien, and Trinh Van Quyet, Chairman of FLC Group and FLC Faros Construction.

Markets hold potential, but cautious optimism needed

Lam Minh Chanh, Chairman of LMC Investment and Commerce Company, commented that the Vietnamese stock market is outperforming other regional peers as its benchmark VN-Index has bounced back to the 700-threshold for the first time in nine years, liquidity has surged to $200 million per day and foreign portfolios have hit an all-time high.

Lam Minh Chanh, Chairman of LMC Investment and Commerce Company.

Nguyen Son attributed the gains to new regulations that loosen trading rules, the country's stable macroeconomy, and the spillover effects of the government's efforts to build an enabling government.

Speeding up the equitization of state-owned enterprises has been one of the key factors that push up the local stock market, said economist Le Dang Doanh.

Economist Le Dang Doanh.

More goods will be pumped into the market and the capital turnover speed will be faster toward this year-end as the government boosts stake sales in companies in the construction, transport sectors, Doanh added.

Finance-banking expert Nguyen Tri Hieu.

Vietnam is being classified as a frontier market together with Argentina, Sri Lanka and Bangladesh, etc, and the outlook on Vietnam's upgrading to emerging market has come clearer. Among criteria set by MSCI, Vietnam can meet several requirements on size and liquidity.

Nguyen Son, Chairman of the Vietnam Securities Depository.

However, Vietnam needs to tackles a wide range of issues such as information disclosure, especially in English, controls in the forex market and short-sale, among others.

Over 500 executives from investment funds, real estate companies and banks took part in the conference.

'Like other experts, I am also upbeat about the stock market, but with caution', said banking expert Nguyen Tri Hieu, pointing out that there has been a great imbalance in the financial market as the size of the capital market is around $100 billion while that of the banking industry is $300 billion.

'Investing in equities will be like heaven in the coming years'

Regarding the attractiveness of the stock market, Tong Minh Tuan - Director of the Ho Chi Minh City branch of Hanoi-based Vietcombank Securities Co.- said a lot of well-performing stocks have been introduced to the market, appealing to both domestic and foreign investors. The market is poised to be busier from now to the year-end.

Tran Du Lich, a National Assembly deputy from HCM City in the 13th legislature.

Echoing Tuan's vision, Duong Van Chung, Director of the North branch at MB Securities (MBS), added that the country's GDP is forecast to advance 6.35% this year, inflation at 5% and credit growth at 18%. The local economy bottomed out in 2012 and its growth cycle will likely continue in the coming four years.

'I believe that stock investment will be a 'heaven' in the next 2-3 years. However, returns will be just around 30-40%,' Chung said, noting that only professional investors could enjoy those high yields while unprofessional investors can face losses.

Economist Ngo Tri Long.

Nguyen Phi Son - Deputy Director of SHS Securities' HCM City Branch, recommended investors pay attention to shares of backbone sectors that support macroeconomic growth such as equities, construction, construction materials and banking.

Stock expert Huy Nam.

'A notable factor is that corporate bosses have paid more attention to investor relations. And I see that FLC is doing that very well,' Son said.

'We will bring FLC share price to its true value'

Many investors and experts raised voices at the conference that FLC shares are 'undervalued'. The company's book value is around 13,000 dong ($0.57) a share but its market prices are below 10,000 dong. Meanwhile, ROS shares hover around 160,000 each, or 16 times the par value.

Trinh Van Quyet, Chairman of FLC Group and FLC Faros.

Explaining this phenomenon, Trinh Van Quyet, Chairman of FLC Group and FLC Faros, said that FLC is a stock that moves in line with the trend of the VN Index (of the Ho Chi Minh City Stock Exchange) and investor sentiment, regardless of the company's fundamentals. The stock is also very liquid.

'Looking into the fundamentals and the market prices, we can see a great difference, which is not appropriate. In fact, one or two foreign funds and I, a major shareholder, are holding a combined 30% or more. Meanwhile, around 60% of the shares are being free-float,' Quyet said.

A view of the FLC Quy Nhon complex, the venue of the conference.

'To bring the stock back to its true value, I will invite some partners who are institutions investors to raise our holding to over 60%. I am sure that FLC share prices will rebound to 15,000 or 30,000 dong a share, or even more because the supply-demand will change,' Trinh Van Quyet asserted.

Stock market needs to be a key fund-raising channel for enterprises

Trinh Van Quyet proposed that the State Securities Commission should educate investors that the stock market is also an effective investment channel.

'Transaction values of FLC and ROS account for one third of the whole market in many trading days. Therefore I believe transactions will reach 10 trillion dong ($470 million) a day. I hope that investors who don't want to keep money at bank to invest [in stocks]. When a few percent of the 100 million people invest, transactions will surely surpass 4 trillion dong a session,' he said.

Over the past decade, FLC Group has been determined not to rely on commercial loans but capital raised from the stock market, and it has succeeded.

Therefore, 'the stock market needs to become a vital fund-raising channel for enterprises, which should not depend on bank loans,' the chairman of FLC Group and FLC Faros said.

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