Benefiting from the strong stock market growth in the first quarter of 2024, a series of securities investment enterprises reported large profits, but is this a way to save business profits?
In the context of the stock market growth in the first quarter of 2024, when the VN-Index increased by 13.6% to 1,284.09 points. The transaction value in the market increased by 23.3% compared to the previous quarter and increased by 115.5% compared to the same period.
The market's continued increase in points and transaction value has invisibly benefited all market participants, from securities companies to investors directly investing on the floor.
Particularly for the group of companies specializing in investment and holding a large proportion of securities investment in total assets, the profit picture in the first quarter of 2024 from securities investment activities has improved.
If 2022 was the year of market decline, businesses such as IPA Investment Group Corporation (code IPA), SMC Trading Investment Corporation (code SMC), MHC Corporation (code MHC), Da Nang Housing Development Investment Corporation (code NDN) all recorded losses, then in 2023 the market recovered, profits began to improve again. Notably, in the first quarter of 2024, this group of 4 companies saw strong growth in profits from the securities investment sector.
Accordingly, in the first quarter of 2024, SMC Investment and Trading Joint Stock Company recorded a profit of VND 179.41 billion, an increase of 759.2% over the same period. Profit from securities investment activities alone contributed VND 316.81 billion, accounting for 177% of the Company's total profit.
In fact, SMC Investment and Trading JSC sold all 13.1 million shares of Nam Kim Steel JSC (code NKG) at an original price of VND 89.5 billion, with selling prices ranging from VND 307.85 billion to VND 320.95 billion. Regarding asset structure, as of March 31, 2024, the value of securities investment of SMC Investment and Trading JSC has returned to VND 0, no longer participating in securities investment.
Thus, SMC Investment and Trading JSC's profit mainly comes from the liquidation of NKG shares, so it will no longer be affected by market developments in the next quarter, profits will only fluctuate from core business activities.
Similarly, IPA Investment Group recorded a profit of VND 104.85 billion in the first quarter of 2024 compared to a loss of VND 136.15 billion in the same period, an increase of VND 241 billion. In addition to the contribution of VND 130.94 billion in profit from joint ventures and associates (mainly due to the profit contributed by VNDirect Securities Corporation), IPA Investment Group also reduced financial expenses by VND 182.5 billion related to the reversal of securities investment provisions compared to the same period of provisioning.
As of March 31, 2024, IPA Investment Group holds 10.91% of capital at Century Real Estate JSC (code CRE), original investment value of VND 928.4 billion, remaining market value of VND 454.4 billion and has set aside a provision of VND 474 billion (at the beginning of the year, set aside VND 493.24 billion).
The stock market has been buoyant, and CRE's stock price has recovered strongly, helping IPA Investment Group reduce provisions, reverse provisions made in previous quarters, and return the consolidated profit report to profit.
However, for investment in CRE stocks, IPA Investment Group has shown no signs of increasing/decreasing investment, maintaining the same portfolio and mainly only revaluating assets according to the reporting period. Therefore, although profit/loss fluctuates according to the listed stock price on the stock exchange, IPA Investment Group's cash flow is not affected by the above securities investment activities.
Enterprises such as Danang Housing Development Investment JSC and MHC JSC are quite active in restructuring and investing according to market waves.
At Nha Da Nang, in the first quarter of 2024, profit decreased by 69.4% compared to the same period, to 32.5 billion VND. Securities investment activities alone recorded a profit of 27.84 billion VND, accounting for 85.7% of total profit.
The business results of Nha Da Nang's securities investment activities fluctuated quite strongly. In 2022, when the market plummeted, Nha Da Nang recorded a loss of VND 162.97 billion; in 2023, it returned to VND 18.24 billion in profit and in the first quarter of 2024, it made a profit of VND 27.84 billion.
Notably, as of March 31, 2024, Danang House had VND 393.7 billion invested in securities, accounting for 30.2% of total assets.
Similarly, in the case of MHC JSC, the profit in the first quarter of 2024 was recorded at VND 6.26 billion, an increase of VND 43.02 billion (the same period had a loss of VND 36.76 billion). Of which, the profit from securities investment activities was recorded at VND 13.18 billion, accounting for 211% of the total profit in the period. As of March 31, 2024, MHC invested VND 249.6 billion in the stock market, accounting for 34.1% of total assets.
According to experts, in the case of Nha Da Nang and MHC, with a portfolio of more than 30% of total assets invested in securities, while also holding market stocks, this is expected to continue to be strongly affected when the stock market shows signs of decline from the end of March 2024 until now.
In fact, stock investment is often driven by market movements, so profits can increase or decrease dramatically, depending on the reporting period and the investment portfolio.
Mr. Lam Van Van, representative of ECI Capital Investment Fund, shared that the stock market is constantly fluctuating, and will continue to affect the value of the assets of enterprises. For enterprises outside the industry, using more than 30% of assets to invest in securities, leading to the problem of difficulty in creating stability in business results compared to enterprises that only focus on core business activities with an insignificant proportion of securities investment.
Source: https://baodautu.vn/dau-tu-co-phieu-lieu-co-cuu-loi-nhuan-cho-doanh-nghiep-d215473.html
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