Investors not depressed about OTC shares

An institution has successfully bought 1mil HPG, and several individuals have purchased 200,000 units. A securities broker on Bao Viet trading floor in HCM City said that he had successfully acted as the broker for a deal in which 300,000 shares were traded.

The hunting for HPG proves to be a strange thing nowadays, while the OTC market is still freezing. A securities broker in Hanoi said that institutions seeking to buy HPG were ready to pay cash immediately instead of advancing security money in order to ensure the success of the transactions.

The demand for HPG has increased sharply since the group’s website announced the information about the post tax profit of the group in the first eight months of the year at VND330bil, fulfilling the yearly plan already. Hoa Phat plans to gain the profit of nearly VND500bil this year, and the plan is considered feasible. If so, the EPS of HPG would be VND3,967, and with the current price level of nearly VND75,000/share, the PE would be 18.4.

The broker on Bao Viet trading floor said that the current transaction price of HPG was really attractive if comparing HPG’s financial indices with other listing share items like SAM or KDC, which have similarities to Hoa Phat, or with Vincom, to be listed in September.

Vincom’s shares, for example, are trading at VND118,000/share, and the expected PE is 59.5 for 2007, and EPS VND1,983. If Vincom can gain the profit of VND131.6bil in 2007 (double the profit in the first half), the PE would be 57.5 and EPS VND2,053.

The HPG ‘phenomenon’ once again shows that investors are still interested in OTC commodities and they are still hunting for good share items. At this moment, several investment funds are seeking to buy shares of Cuu Long Pharmaceutical, Dong Phu Rubber and Masan. The low prices of the share items prove to be attractive in the eyes of investors, but the most attractive thing is the good brand name and good business strategy.

In the August stock bulletin, the Saigon Securities Incorporated SSI wrote that it was the right time for investors to carry out their long-term investment deals on the OTC market.

 The OTC has been falling for the last six months, and the price of many bank share items have dropped to the deepest lows since the beginning of the year. However, the falls seem to be stopped with a low volume of transactions.

 A question has been raised about why investors are still not buying shares at this moment. SSI believes that as the market has been freezing for quite a long time, domestic investors have become more hesitant and cautious. They will only make deals when they see clearers signs of the market’s recovery.

As for foreign investors, the transparency of OTC shares remains the biggest barrier: they have nearly no information about the companies, and it would be very costly to get the information.

 In fact, Hoa Phat or Dong Phu shares can catch special attention from investors because the companies know how to provide information to investors, through mass media or their own websites.

 According to SSI, in order to improve the current situation on the OTC market, the State Securities Commission should urge public companies to make registration and provide periodic information.