Rong Viet’s shareholder meeting (VDSC): No trade-off at all costs

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(ĐTCK) At the 2021 Annual General Meeting of Shareholders taking place this afternoon (April 7, 2021), Mr. Nguyen Mien Tuan, Chairman of the Board of Directors of Rong Viet Securities JSC (VDSC – stock code VDS) said, In the first quarter of 2021, the company estimated to achieve pre-tax profit of 123 billion dong, fulfilling 68% of the plan.

Careful profit planning

With specific information about the business results of the first quarter of 2021 at the meeting, Mr. Tuan said, about the revenue structure of the first quarter, brokerage revenue of 52.5 billion VND, completing 40% of the year plan, loan segment is 60 billion dong, about 25% of the plan, and the IB segment is 33.5 billion dong, fulfilling 67 percent of the year plan.

In terms of investment activities, compared to general developments, the VN-Index grew by nearly 8%, while the results of VDSC’s proprietary trading achieved outstanding growth, the average rate of return on investment capital was over 30%.

In 2021, Rong Viet sets its parent company’s revenue target in 2021 to be 528 billion dong, up by 13% and profit after tax is 144 billion dong, down slightly by 4%. The above plan is based on the assumption that VN-Index will fluctuate in the range of 1,000 – 1,300 points, average liquidity is about 9,000 – 10,000 billion VND / session.

In particular, the revenue structure including brokerage business increased by 22% to VND 130 billion, securities services increased by 20% to VND 238 billion, investment banks increased by 170% to VND 50 billion, investment activities decreased by 30% to VND 90 billion.

Operating expenses are expected to increase by 27% to VND348 billion, stronger than the increase in revenue, which is the reason the revenue plan increased but the profit decreased slightly. Expected dividend is 8%.

Shareholders said that this plan is too cautious, because 2020 is very difficult, the first quarter of 2020 even lost money, but Rong Viet still achieved impressive results. Not to mention, the investment plan also increased sharply compared to the previous year. So why not set higher plans.

Mr. Mien Tuan shared that in the first quarter of 2021, although the market had a period of strong volatility, in the first half of January the market increased well from 1,004 points to nearly 1,200 points, the increase of the market thanks to a lot of new investors. This year, Vietnamese Dragon shareholders are also more, maybe including many new shareholders.

From the beginning of 2021 to the time of closing the list to pay 3% dividend, the number of Rong Viet shareholders increased from 800 – 900, to more than 2,600 shareholders, 3 times more than in just over half a month shows the number of investors. F0 is huge. This also helped VDS share price increase from 10,000 to 14,000 dong, liquidity improved significantly. But the day the market fell, from January 18 to January 31, the stock price also dropped quickly.

In such a context, the Board of Directors of Rong Viet when setting the plan is also on a prudent point of view. Accordingly, the point of view of the Board of Directors when setting the plan to the shareholders and happy to report it is possible.

“It is important that the level of the plan is sure to do it. In the first quarter of 2020, Rong Viet saw a loss of 88 billion dong, the Board of Directors still put a profit plan of 45 billion dong, at that time, everyone was also concerned if they could be achieved or not and in fact achieved positively as shareholders knew. Tuan said.

Accordingly, The Board of Directors of Dragon Viet expects shareholders to agree with this plan, from the perspective of the Board of Directors, the Board of Directors, will commit to achieve the highest profit and expect shareholders to authorize the Board of Directors to adjust the plan according to market conditions accordingly.

Not increasing capital in 2021, but 2022 can increase sharply

The content that many shareholders are more interested in at the meeting is the fact that many securities companies have plans to increase their capital strongly to increase their capacity to provide financial services to investors, take advantage of the wave of account opening. New investor, Rong Viet has this plan or not? At the same time, how the Company’s operation strategy will be to suit the new context. In addition, Rong Viet has just acquired the dominant fund management company Viet Long, so how this company is doing, how will Rong Viet’s strategy be.

Mr. Mien Tuan said that the capital increase, which is related to the payment of dividends of 8%, while EPS 1,500 VND. Currently, the capital of Viet Dragon is VND 1,000 billion, ranked 26th among securities companies. In 2020, in terms of profitability, Viet Dragon ranked 18th. Profit efficiency ROE 13.58%, ranked 11th. The objective of the Board of Directors is to build a system, create good profitable efficiency, ROE annually over 20%, then increase capital to attract shareholders and investors.

Rong Viet identifies 5 revenue generating segments: brokerage, margin lending (securities service), investment (self-employment), IB and asset management.

In January 2021, the Board of Directors decided to buy back 51% of the shares of Viet Long Fund Management Company. The company is restructuring, can re-function operations, with coordination between VDSC and Viet Long. Rong Viet is a small number of securities companies whose subsidiary is fund management, which can provide more services to customers.

Currently, this fund management company has capital scale of 40 billion dong and pre-tax profit of 5 billion dong.

According to Mr. Tuan, if he increases capital now, he will call for existing shareholders. Although there are now many organizations and individuals who want to become an investor of Rong Viet. But HDTQ is not in a hurry, but has to build the system foundation above the current capital level. At that time, capital will be increased, it is likely that from 2022, capital will be increased strongly from accumulated profits and new investors can be found to accompany.

Accept to reduce market share in the short term, not race for market share

According to Mr. Tuan, currently, the largest equity company over VND 10,000 billion is SSI, followed by Mirae Asset. If Rong Viet competes with other securities companies, based on the point that the company is not as strong as them, that is, financial capacity, cheap capital, the competition will not be lost.

With Rong Viet, the brokerage and service business orientation is oriented towards niche markets, based on strengths, focusing on improving the quality of the team, diversifying products and quality of investment advice. With the aim of bringing added value to customers through the right advice, bringing investment performance outperformed the market.

Dragon Viet accepts to reduce market share in the short term, not compete market share at all costs, in 2019 the market share is 2.9%, in 2020 it is reduced to 1.5%, but the efficiency in the field of brokerage and securities services is good. In the current period, do not trade market share at all costs.

Mr. Nguyen Mien Tuan, Chairman of the Board of Directors of Rong Viet Securities Company

Proof of this, Mr. Tuan said, Rong Viet measured by the net asset value of customers. By the end of 2020, the client’s net asset value at VDSC is VND 37,800 billion, at the end of the first quarter of 2021 is VND 46,800 billion, an increase of 26% compared to the beginning of the year. This figure shows the effectiveness of Rong Viet in customer consulting and helping them find good profits.

Regarding proprietary trading, many shareholders are afraid of risks, according to Mr. Tuan, this is true, RongViet has experienced it in the past. However, in another angle, that is, the broker wonders, how can he or she do business at a loss to advise customers well. Accordingly, in the income structure, Rong Viet will harmonize segments. In the first quarter of 2021, the activities all made a relative contribution, the IB segment contributed 207 billion VND, accounting for 33%, while the previous years were only 3-4%.

Rong Viet considers investment as a strength, but does not put all assets into it, but uses the advantage of understanding the market to advise customers, and I also invest in good results for shareholders.

“The Vietnamese Dragon is not afraid of losing opportunities, only afraid of losing money. As for money, there is an opportunity, this is the spirit for Rong Viet’s investment, ”Mr. Tuan said to shareholders.

With IB, there is a lot of focus on 2 areas that bring large revenues to VDSC: capital arrangement through corporate bond issuance consultancy, large-scale stock issuance, combining building a system between bond investment, bond real distribution to customers … The company has been implementing this system for 8 months. In the first quarter of 2021, the Company arranged and re-distributed VND 800 billion to customers, bringing positive revenue.

The next segment is M&A consulting, with the forecast of capital demand and M&A demand in the large Vietnamese market, Rong Viet is investing heavily in the IB team.

In 2020, Rong Viet recorded positive results, revenue increased 36% to 466 billion VND, profit 3.3 times, reached 150 billion VND. This result mainly came from investment activities when revenue increased sharply from 17 billion dong to 128 billion dong. With this result, Rong Viet submits to shareholders to pay dividends in 2020 at 8%, of which 3% in cash has advanced in January 2021 and the remaining 5% is divided by shares.

Accordingly, Rong Viet will issue more than 5 million shares to pay dividends, charter capital is expected to increase from VND 1,001 billion to VND 1,051 billion. Time to implement is in 2021.

At the meeting, shareholders also elected additional members of the Board of Directors for the term 2017-2021, the result of which Ms. Nguyen Thi Thu Huyen was elected. Currently, Ms. Huyen is also the General Director of Rong Viet.

Source: tinnhanhchungkhoan.vn – Translated by fintel.vn