The Pennies-for-Dollars Stock List

The ubiquitous iced tea, or “tra da,” is a quintessential example of affordability in Vietnam, with a price that’s hard to beat. To be fair, let’s assume the most inexpensive cup of “tra da” on the market today is 3,000 VND. At this price, there are 27 tickers on the HOSE and HNX exchanges with market prices equal to or lower than this humble beverage. The cheapest stock is priced at 1,200 VND, while the most expensive barely reaches the 3,000 VND mark.

Topping this less-than-desirable list is FID (Vietnam Enterprise Investments Corporation). As of October 11, FID’s market price stood at a mere 1,200 VND per share, reflecting a 48% decline since the beginning of the year. In second place is CTC (Hoang Kim Tay Nguyen Group), which has maintained a market price of 1,300 VND per share since the start of the year. Bringing up the rear (with the highest price) is NRC of Danh Khoi Group, priced at 3,000 VND per share.

When it comes to declines, AMV (Vietnam-America Pharmaceutical and Medical Equipment Production and Trading) and TKG (Tung Khanh Production and Trading) lead the pack, with losses of 77% and 76% in value since the beginning of the year, respectively. Their current market prices are 2,100 VND and 2,400 VND per share, respectively. Other notable mentions include KPF (Koji Asset Investment) at 1,820 VND per share, down 68%; ITA (Tan Tao Investment and Industry) at 2,350 VND per share, down 65%; and DAG (Dong A Plastic Group) at 1,430 VND, down 56%.

What’s behind these rock-bottom prices?

Stock prices are influenced by a multitude of factors, ranging from a company’s fundamentals and business prospects to industry outlooks and market supply and demand dynamics. However, more often than not, extremely low-priced stocks tend to have deeper underlying issues.

In the case of FID, the stock is currently facing a “combo” of warnings, surveillance, and trading restrictions. The company’s internal situation is less than ideal, with continuous losses, the heaviest being a 4 billion VND loss in 2020. In 2023, despite doubling its revenue from the previous year to over 84 billion VND, FID still incurred a net loss of nearly 3 billion VND (compared to a meager profit of 64 million VND in 2022).

This trend continued into the first half of 2024, with FID posting a net loss of 2.5 billion VND and a cumulative loss of over 23 billion VND as of the end of June. The company’s 2024 semi-annual audited financial statements also received a series of qualified audit opinions, mainly related to provisions for personal advances – which FID explained as “advances for handling company matters” – and loan contracts with several joint-stock commercial banks.

FID responds to continued losses in the first half of 2024 and the qualified opinion from auditors

DAG, of Dong A Plastic Group, is currently under a trading suspension. Similar to FID, DAG is mired in a mess of problems and is going through one of its toughest periods in two decades. According to the company’s 2023 audited financial statements (released in July 2024), DAG incurred a net loss of up to 600 billion VND, mainly due to a provision for inventory devaluation of 404 billion VND, which caused a significant increase in cost of goods sold. This massive loss wiped out the company’s accumulated profits from the previous 16 years, resulting in a negative retained earnings figure of 588 billion VND at the end of 2023 (compared to a positive 19 billion VND at the beginning of the year). The report received three pages of comments from the auditors, highlighting bad debts – including loan and tax debts – and expressing doubts about the company’s ability to continue as a going concern.

The first half of 2024 hasn’t brought any positive changes for DAG, with a net loss of 67 billion VND and equity of just over 27 billion VND. The company generated only 55 billion VND in revenue, a mere 6% of the previous year’s figure. The trading suspension can even be seen as a blessing in disguise for DAG, preventing its stock price from falling further.

ITA is another company that has been making headlines for all the wrong reasons. The company, led by Dang Thi Hoang Yen (or Maya Dangelas), was recently placed under a trading suspension in late September 2024 due to ongoing violations of information disclosure regulations.

In reality, ITA‘s financial performance in recent times hasn’t been all that bad. After a record loss of 260 billion VND in 2022, the company bounced back with a net profit of over 202 billion VND in 2023. In the first half of 2024, ITA continued this positive trend, posting a net profit of nearly 64 billion VND, a 66% increase from the same period last year, mainly due to the reversal of provisions for doubtful debts and reduced bank interest expenses, along with cost-saving measures in the second quarter.

However, ITA‘s stock price has continued to plummet due to various controversies surrounding the company. In 2022, the company was ordered by the Ho Chi Minh City People’s Court to initiate bankruptcy proceedings, relating to a debt of approximately 21 billion VND to Cong Ty TNHH Thuong Mai Dich Vu Xay Dung Quoc Linh – a claim that Ms. Yen has consistently denied. This court ruling also triggered a series of subsequent lawsuits, which continue to impact the company’s operations, as explained in ITA‘s Q2 2024 financial statement disclosures.

Additionally, ITA has made some controversial statements. Regarding the delay in publishing its 2023 audited financial statements and 2024 semi-annual reviewed financial statements, Nguyen Thanh Phong – CEO of ITA – claimed that HOSE and the State Securities Commission of Vietnam (SSC) had engaged in abnormal practices, creating obstacles for auditing firms and suspending the licenses of auditors working with ITA, ultimately leading to the departure of these firms. Ms. Yen, on the other hand, asserted that ITA was being targeted by malicious forces aiming to take over the company. In the face of potential delisting, ITA issued a statement implying that the SSC and HOSE would be held responsible.

Another notable mention is DDG (Indochina Export Import Industry Investment), which is currently under a warning signal and has recently been placed under surveillance due to violations of information disclosure regulations regarding its 2024 semi-annual reviewed financial statements. As of October 11, its market price stood at 2,800 VND per share, a 30% drop from the beginning of the year. However, compared to its peak in 2023 – just before a series of 19 consecutive “floor price” sessions – the decline is a staggering 93%.

The main reason behind DDG‘s predicament is the challenges it faces in its business operations. In 2023, the company incurred a record loss of nearly 206 billion VND (compared to a profit of 44 billion VND in the previous year). In the first half of 2024, the company’s revenue reached just over 120 billion VND, only a third of the same period last year. While it did manage to eke out a net profit of approximately 6.6 billion VND (compared to a loss of nearly 194 billion VND in the first half of 2023), this profit was primarily due to the disposal of fixed assets of the parent company.

Optimists often say that every storm runs out of rain, and that stocks can’t keep falling forever. However, the storm that these companies’ shareholders are facing may still have a long way to go.

Chau An