Changing name doesn't change fate, fined for violations in the best revenue segment

(CLO) Pinetree Securities has undergone a long name change, but its business performance has not improved significantly, and the company has been fined for violations in its most profitable segment.

Penalized for violations in its best-performing revenue stream.

On October 9, 2024, the State Securities Commission (SSC) issued Decision No. 1097/QD-XPHC imposing administrative penalties on Pinetree Securities Joint Stock Company (Pinetree Securities).

Accordingly, Pinetree was fined VND 125 million in accordance with point c, clause 4, Article 26 of Government Decree No. 156/2020/ND-CP dated December 31, 2020, on administrative sanctions in the field of securities and securities market (Decree No. 156/2020/ND-CP) for violating regulations on margin trading restrictions (the company provided new loans for securities that are no longer on the list of securities allowed for margin trading and considered these securities as actual assets of customers in their margin trading accounts).

Pinetree Securities has undergone a long name change, but its business performance has not improved significantly, and the company has been fined for violations in its most profitable business segment. (Photo: ST)

Simultaneously, the company was fined VND 65 million in accordance with point a, clause 3, Article 42 of Decree No. 156/2020/ND-CP for the act of disclosing information not within the legally prescribed timeframe (On July 18, 2024, the Ho Chi Minh City Stock Exchange (HOSE) issued notice No. 1331/TB-SGDHCM adding securities ineligible for margin trading; however, on July 25, 2024, the Company published the list of securities eligible for margin trading on its website; On August 30, 2024, HOSE issued notice No. 1562/TB-SGDHCM adding securities ineligible for margin trading; however, on September 6, 2024, the Company published the list of securities eligible for trading on its website).

The total fine imposed on Pinetree Securities is 190 million VND.

As can be seen, both of the aforementioned violations relate to margin trading. And margin trading is the most profitable segment for the company.

Specifically, in the first six months of 2024, Pinetree's operating revenue was VND 146 billion, a slight increase compared to VND 118 billion in the same period of the previous year. Of this, interest income from loans and receivables accounted for the highest proportion, reaching 63.2% (equivalent to VND 92.2 billion). This figure increased by VND 36.3 billion, or 64.9%, compared to the first six months of 2023.

In previous years, margin trading was also a key growth driver for Pinetree, with interest income from loans and receivables accounting for a very high proportion of operating revenue, at 55.5% in 2023 and 56.4% in 2022.

It can be seen that in the first half of 2024, margin trading contributed more to the company's revenue. However, it was also the area with the most violations, resulting in penalties.

Changing your name doesn't change your luck.

For the vast majority of stock market investors, Pinetree Securities is not a familiar name and has never been among the top brokers in the market. This is understandable, as Pinetree is not the company's original name. The company has undergone several name changes previously.

Pinetree Securities, formerly Mekong Securities Joint Stock Company, has been operating since 2003 but has faced significant difficulties, experiencing a long period of losses. At the end of 2016, Mekong Securities had accumulated losses of 22.7 billion VND. The company was once placed under special supervision by the State Securities Commission.

In 2017, Mekong Securities changed its name to HFT Securities Company. Despite the new name and a profit of 3.7 billion VND, the company had not yet eliminated its accumulated losses. As of December 31, 2017, HFT had accumulated losses of 19 billion VND.

In 2019, the South Korean giant Hanwha Investment & Securities completed the acquisition of HFT and renamed it Pinetree Securities.

In 2019 – the first year that South Korean capital accounted for 98.38% of the company's capital – Pinetree Securities suffered a loss again, amounting to 4.7 billion VND. This loss was further compounded by 23.4 billion VND in 2020.

In the last two years, the situation has improved, with Pinetree Securities earning a profit of VND 13 billion (in 2022) and VND 22.3 billion (in 2023). However, at the end of 2022, Pinetree Securities still had accumulated losses of VND 3.5 billion. It wasn't until 2023 that the company eliminated these losses and achieved VND 18.8 billion in undistributed profits as of December 31, 2023.

However, the company's capital utilization efficiency remains very low. Pinetree Securities' after-tax profit/equity ratio at the end of 2023 was only 1.5%.

Source: https://www.congluan.vn/chung-khoan-pinetree-thay-ten-khong-doi-van-bi-phat-vi-sai-pham-o-mang-co-doanh-thu-tot-nhat-post317473.html