New listing activity is picking up again.

After a period of stagnation, the Ho Chi Minh City Stock Exchange (HoSE) has seen many companies submitting applications and planning new listings.

Moc Chau Milk has just been approved for listing on the HoSE stock exchange. Photo: Dung Minh

The first reputable companies to be listed on the HoSE (Hanoi Stock Exchange) are starting to appear.

Following the sharp decline at the end of 2021 and throughout 2022, the stock market began to recover in 2023 and continued its upward trend for almost the first half of 2024, with expectations of a return of foreign capital as Vietnam strives to upgrade its market status, and businesses forecasting positive business results from the low base of 2023.

In this context, it's understandable that many businesses have been planning new listings or transferring to the HoSE to prepare for attracting foreign capital as the global economy enters its next expansion cycle.

According to records on the HoSE exchange, four companies have submitted listing applications since the beginning of the year. Specifically, DSC Securities Joint Stock Company (code DSC) submitted an application to list 204.8 million shares on March 1st. DNSE Securities Joint Stock Company submitted an application to list 330 million shares on March 7th. Gelex Electric Joint Stock Company (code GEE) submitted an application to list 300 million shares on April 24th. Hoang Gia Production and Investment Joint Stock Company (code RYG) submitted an application to list 45 million shares on May 21st.

Furthermore, on May 24th, MCM shares of Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk) were approved for transfer from UPCoM to HoSE and will trade its last session on UPCoM on June 13th before officially trading on HoSE.

Since the Covid-19 pandemic, stock listing activity has been subdued, mainly focusing on a few individual companies operating in the real estate or agriculture sectors. Business results and share prices after listing have shown signs of decline, disappointing investors.

For example, Dat Xanh Real Estate Services Joint Stock Company (DXS code), listed in July 2021, was introduced as a "blockbuster" of the market in 2021. However, since reaching its peak on March 21, 2022, at 25,460 VND/share, the share price has continuously decreased and by May 28, 2024, it was only 7,900 VND/share, a decrease of 68.97% from its peak, as its business results continuously declined after its IPO.

A notable example of buying and holding onto newly listed stocks at a loss is Vinh Hoan Joint Stock Company (VHC). In Q3 2021, it invested VND 38.35 billion in DXS shares, setting aside a provision of VND 1.86 billion, and by the end of Q1 2024, it still had invested VND 60.27 billion in DXS shares, setting aside a provision of VND 26.28 billion, corresponding to a temporary loss of 43.6% of its total portfolio.

Similarly, Khai Hoan Land Group Joint Stock Company (code KHG), listed in July 2021, saw its share price fall by 62.9% from July 20, 2021 to May 28, 2024, from VND 15,400 to VND 5,720 per share. Meanwhile, Khai Hoan Land is experiencing a sharp decline in profits in 2023 and the first quarter of 2024.

Recently, on December 1, 2023, Siba High-Tech Mechanical Engineering Group Joint Stock Company (stock code SBG) officially listed its shares on the HoSE stock exchange. However, like other companies in the same industry, this company recorded a sharp decline in business results, with its share price falling by 22.1% from December 4, 2023 to May 28, 2024, from VND 19,250 to VND 15,000 per share.

The best part of the game is yet to come.

Previously, new listings were mainly from small and medium-sized real estate companies and small businesses. These companies then consistently reported difficult business results, leading to continuous declines in stock prices and losses for investors. However, looking at the list of companies that have applied for and been approved for listing, it is clear that the quality of businesses has improved and the range of listed industries has expanded.

Looking at the list of companies that have applied for and been approved for listing, it is clear that the quality of businesses has improved and the range of listed industries has expanded.

For example, Moc Chau Milk owns a total herd of nearly 26,500 cows, 3 breeding centers with a scale of 1,600 cows, an average productivity of over 25 liters of milk per cow per day, and its products are available in nearly 1,400 supermarkets such as Aeon, Big C, Winmart… As of March 31, 2024, the company had no debt and possessed cash of VND 1,545.96 billion, accounting for 59.3% of total assets. However, like its parent company, Vietnam Dairy Products Joint Stock Company (VNM), the biggest risk is that Moc Chau Milk is operating in an industry showing signs of saturation, with intense competition among domestic and international dairy companies.

Similarly, Gelex Electric is a leading manufacturer of electrical equipment in Vietnam and manages and invests in power generation projects. The company owns several major brands, including Vietnam Electric Cable Joint Stock Company, Electrical Equipment Joint Stock Company, Hanoi Electromechanical Manufacturing Joint Stock Company, EMIC Electrical Measurement Equipment Joint Stock Company, Vietnam Copper Wire Company CFT, Gelex Electricity Trading Joint Stock Company, and Gelex Power Generation Company Limited…

In fact, not only the companies that have filed applications, but also a number of companies at their 2024 annual general meetings revealed plans for IPOs and listings of their subsidiaries. Among them, Hoang Anh Gia Lai Joint Stock Company (HAG) shared its plan to IPO Gia Lai Livestock Joint Stock Company at the end of 2024; Masan Group Joint Stock Company (MSN) plans to IPO and list Masan Consumer Joint Stock Company (MCH); Hoa Sen Group Joint Stock Company (HSG) plans to IPO its plastics and steel pipe segments…

Mr. Lam Van Van, representative of ECI Capital Investment Fund, stated that in the context of a difficult economic situation, businesses that operate efficiently will be bright spots in the market. An IPO of a well-performing subsidiary will create attractive new products for the market, thereby helping businesses easily raise capital without increasing the burden of interest payments, solving the capital problem for both the subsidiary and the parent company. If the subsidiary leverages its advantages after listing, its successful development will be a "lifeline" for the parent company's gradual recovery.

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