Listed companies report losses – an expected thing

Many listed companies have reported losses for the first half of the year. However, the reports seem to be helping rather than hurting them.

The Refrigeration Electrical Engineering Corporation (REE) has reported the net turnover of VND577.35bil ($36.06mil) for the first six months of the year, an increase of 23.94% over the same period of last year, while post tax profit was minus VND174.466bil ($10.97mil).

The main reason behind the loss was that the corporation set aside a provision of funds in the event of securities price decreases, at VND107.7bil ($6.68mil). The total amount of the provision by the end of the second quarter had reached VND268.4bil ($16.75mil).

Sacom, a cable and telecommunications company, reportedly gained VND1,104.8bil ($69mil) in turnover, a decrease of 5.66% over the same period of last year, which meant the loss of VND65.52bil ($4.06mil).

Sacom suffered a loss due to declining business while financial expenses increased sharply over the same period of last year.

The loss Bao Viet Securities Company has reported is quite impressive, at VND324bil ($20.25mil), which has shocked many investors. Another securities firm, Saigon Securities Incorporated (SSI), has also reported the loss of VND27bil ($1.68mil).

Bibica, a confectionary company, reportedly incurred the loss of VND5bil, Minh Phu Seafood Company incurred the loss of over VND150bil. All these companies have good brand names and recognised market capitalisation values.

A finance expert in HCM City said that the losses all were expected in the context of the national economy’s difficulties (high inflation rate, high input material prices and high petrol prices).

However, it seems that the reports of losses have been helping companies rather than damaging their prestige. The finance expert said that the companies have received sympathy from investors, who learned the ‘Bach Tuyet Cotton’ lesson. Bach Tuyet Company once reported big profit, but in fact, it had been suffering losses for a long time, and the losses have only recently come to light.

Now REE is well known as the company pioneering in reporting losses monthly and quarterly, and the company which has been following strictly regulations on provisioning.

Being a big-scale enterprise, which has business in many fields, the loss reporting by REE, at first, shocked many investors. However, they have realised that the loss is understandable, and they appreciate the honesty of the enterprise.

REE’s shares witnessed price decreases in the trading sessions after the enterprise reported the loss, but the shares have regained prestige in recent sessions. It seems that reporting losses is not always a ‘tragedy’ for enterprises.

Le Dat Chi, a securities expert in HCM City, also said that the loss of listed companies was expected, and that most loss-making companies were ones bogged down in financial investments. However, Chi said that investors should look into the future of the companies.

“When the stock market falls so deeply, it is impossible for financial investments to make profit. The companies still can ‘stay afloat’ if they have strong financial capability,” Chi said. (Tien phong)