Value of Vietnamese firms only half of companies on other SE Asia bourses

The valuation of Vietnamese companies on the stock market is lower than 40-50 percent than in neighboring markets, according to Dominic Scriven, head of the Vietnam Business Forum’s Capital Market Working Team, and CEO of Dragon Capital, an investment fund management company.

Dominic Scriven, head of the Vietnam Business Forum’s Capital Market Working Team

Scriven, speaking at a meeting this month, said the P/E (price per earning) of Vietnamese enterprises is just slightly above 9. Meanwhile, in other regional countries, such as the Philippines, the figure is nearly 18.

“This means that a company in the Philippines is worth twice as much a company in Vietnam,” he said.

Regarding the P/BV (price per book value), the indexis over 1 for Vietnamese businesses, while it could be 2-2.1 in other countries.

The P/E (price per earning) of Vietnamese enterprises is just slightly above 9. Meanwhile, in other regional countries, such as the Philippines, the figure is nearly 18.

Why does the undervaluation occur? According to Scriven, it is necessary to find out who the investors in the Vietnamese stock market are. Besides short-term investors, or those who ‘surf for stocks’, domestic investors include investment funds, pension funds, insurance funds and the State as well.

Where are the foreign investors?

Petri Der, director of PYN Elite, said for the next 10 years, Vietnam will remain an attractive market for investment.

The market, which remains small in scale, can attract more and more foreign investors. According to the Vietnam Securities Depository Center (VSD), the agency granted 112 trading codes to foreign investors in October 2015 alone, four times higher than that of earlier this year.

However, according to Scriven, one needs to face the facts on how much capital from foreign investors has been mobilized so far.

The reports showed that disbursement from foreign investors is not high. By mid-November, foreign investors had bought more than they sold by VND4.1 trillion on the HCM City Stock Exchange (HOSE) and VND833 billion on the Hanoi Stock Exchange (HNX).

According to Nguoi Dong Hanh, which cited an official report, foreign investors bought more than they sold over seven months, and sold more than they bought over a four- month period so far this year.

“A lot of enterprises have had difficulties in the equitization process because of oversupply. As such, the story here is is creating demand,” Scriven said.

Though the risk from exchange rate fluctuations continues, the Vietnamese stock market remains an attractive investment channel. A report of KIS, a securities company, shows that the proportion of shares held by foreign investors by June 2015 had increased slightly compared with the first quarter.

In the first six months of 2015, Vietnam’s GDP growth rate was 6.3 percent, higher than the 5.2 percent of the same period last year.

Source: talkvietnam.com