AsemconnectVietnam - Da Nang Housing Investment Development Joint Stock Company (Da Nang House, stock code NDN) and MHC Joint Stock Company (stock code MHC) have a stock investment portfolio with a capital price accounting for more than 30% of total assets.

VN-Index may decrease again
In the first three months of 2024, the stock market had positive developments, VN-Index increased by nearly 14%, thanks to the story of expectations of recovery from a low base in 2023 and the prospect of upgrading the market. However, since the beginning of April until now, VN-Index has fluctuated widely in the range of 1,250 - 1,290 points, after a decline to below 1,180 points in mid-April, one of the main reasons is investors. Foreign investment boosted net selling.
Trading data on HOSE in the first 6 months of 2024 shows that foreign investors net sold more than 1.45 billion shares, equivalent to a net withdrawal of VND52,072.5 billion. Of which, net selling activities focused on the second quarter, with a value of up to VND38,200.9 billion.
In terms of valuation, according to data from VNDIRECT Securities Company, VN-Index's P/E in the last 5 years has ranged from 10.4 to 15 times, currently it is nearly 14.8 times. Unattractive valuations and prolonged net selling by foreign investors make domestic investors cautious.
A brokerage expert at a leading securities company in terms of market share assessed that the market is in a poor condition, especially when liquidity has recently decreased, only half of the previous average. Accordingly, VN-Index is unlikely to reestablish the threshold of 1,300 points, but is at risk of falling to 1,200 points in this third quarter.
"The market needs a big enough decrease to lower prices and create a new story to attract cash flow," the broker said.
"Check" your stock investment portfolio
On the stock exchange, most businesses focus on production and business activities, and their securities investment portfolio accounts for a small proportion of total assets. However, this proportion in some businesses is high, significantly affecting profits after tax.
At Da Nang House, as of March 31, 2024, this business used VND393.7 billion to invest in securities, accounting for 30.2% of total assets. Of which, the Company invested VND52.1 billion in STB shares of Sacombank, VND46.2 billion in HPG shares of Hoa Phat Group, VND21.6 billion in DGC shares of Duc Giang Chemical Group. , VND17.6 billion into MWG shares of Mobile World Investment, VND8.7 billion into QTP shares of Quang Ninh Thermal Power, VND247.6 billion into other stocks.
Da Nang House operates mainly in the real estate sector, usually implementing a project in each phase. After completing The Monarchy Complex - Block A project with a scale of 1,842 m2 in 2016, the Company deployed The Monarchy Complex - Block B project with an area of 8,967 m2, total investment capital of VND1,038 billion, focusing on handing over apartments in the period 2020 - 2023. Currently, Da Nang House does not have a new project under its belt, although it planned to implement the Paracel project many years ago.
Regarding business results, Da Nang House has 3 years of recording record profits: 2020 profit of VND329.2 billion, 2021 profit of VND251.8 billion, 2023 profit of VND218.1 billion, mainly due to the Company Accounting for revenue from handing over apartments at the Monarchy - Block B project.
By the end of the first quarter of 2024, the Monarchy - Block B project was almost completed, with only VND113 billion left in inventory and VND40.4 billion paid in advance by buyers (in early 2020, this project recorded inventory is VND721.7 billion and the buyer pays VND1,386.8 billion in advance).
Thus, if there is no breakthrough to deploy the Paracel project, or carry out M&A of other projects, Da Nang House will lack a flagship project and profits will depend on financial investment activities.
Da Nang House's financial investment portfolio focuses on basic stocks such as STB, HPG, DGC, MWG, QTP..., but it is difficult for businesses to avoid the risk of reduced investment efficiency, even losses in case the stock market corrects.
If in 2021, the stock market is favorable, Da Nang House recorded a profit of VND78 billion from investment activities, then in 2022, the market will be difficult, this activity will lose VND163 billion, leading to negative profit after tax VND143 billion.
Similarly, MHC invested VND249.59 billion in the stock market as of the end of the first quarter of 2024, accounting for 34.1% of total assets. Of which, the Company invested VND105 billion in EVF shares of Dien Luc Finance Joint Stock Company, VND55.1 billion in PXL shares of Long Son Petroleum Industrial Park Investment Joint Stock Company, VND49,7 billion into Eximbank's EIB shares, VND39.7 billion into other stocks.
MHC, formerly known as Hanoi Maritime Joint Stock Company, was established in 1998, operating in the fields of waterway and road transport, warehousing and storage of goods. In 2022, business results of enterprises will be greatly affected by financial activities (stock investment). Specifically, the Company recorded a loss of VND30.79 billion, mainly due to the provision for devaluation of securities of VND67.7 billion and loss of liquidation of investments of VND115.3 billion.
At the 2024 annual general meeting of shareholders held at the end of June, MHC's Board of Directors shared that the Company's financial investments have better returns than bank deposits. This year, MHC plans to reach VND35 billion in pre-tax profit, an increase of more than 25% compared to last year.
However, the price of MHC shares on the stock exchange has remained flat, fluctuating around 9,000 VND/share since mid-April until now, although the business' pre-tax profit was VND7.1 billion in the first quarter, a sharp improvement. Strong compared to the loss of VND36.5 billion in the same period last year.
It can be seen that when the core industry lacks projects and/or contributes insignificantly to the business situation, Danang House and MHC spend a lot of financial resources to invest in securities to optimize capital flow, expected to contribute to total profit. However, converting one-third of total assets into a stock portfolio can drag back profits, even causing losses as has happened in the past, if the stock market corrects.
N.Nga
Source: VITIC/Tinnhanhchungkhoan