Stock prices plummet “don’t understand why”
Ending the trading session on January 17 on Ho Chi Minh Stock Exchange (HOSE), FRT increased the price by VND 350 (corresponding to the increase of 1.94%), to VND 18,400. But this increase is nowhere near what FRT has lost in the past few months.
If taking the milestone from the closing session on January 17, 2020 three months ago, on October 17, 2019, the price of FRT share at that time would be VND 43,900. So in the past three months, FRT shares have depreciated about 58%.
Taking the mark from July 17, 2019, the FRT price then stood at 53,700, so in the past six months, FRT shares lost 66% of the price.
Remember, FRT shares listed on April 26, 2018 with a reference price of VND 125,000. Right at the beginning, FRT gained to the ceiling price + 20% but there were still many buy orders that couldn’t match because of the oversold.
At that time, the price of FRT stock was overvalued!
If calculated from the reference price on the listing date nearly two years ago, the price of FRT share has lost more than 85%.
What is happening with FRT, the No. 2 mobile phone retailer in Vietnam, where the CEO of “female general” Nguyen Bach Diep is said to be talented and recently or “aired” in the above events and programs? TV sharing on work and vision?
What is happening to FRT after FPT gradually divested its capital from this subsidiary to below 50%?
When FRT lost more than 85% of market capitalization, the amount of shares that foreign investment funds and institutions held in the past changed color to become a “hatred” of loss and loss. Like the hatred of some foreign investment funds in deals with Yeah1! after the media company was cut off by YouTube in partnership, causing stock prices to plummet.
The fall of Yeah1 stock price! and FRT is just a little bit alike, it’s a big drop. Yeah1’s stock price crash! anyone can clearly see the reason, but in the case of FRT, even the female CEO of this company also spoke in a shareholder meeting that did not understand why such a reduction.
In an analysis on ssi.com.vn on November 28, 2019, there were some points that made FRT lost 67% of market capitalization (up to that time).
Firstly, by the end of October 2019, FRT’s total revenue reached 13,755 billion VND, up 11.8% over the same period in 2018; However, profit before tax and after tax both decreased compared to the same period last year, respectively 8.3% and 10.6%. Specifically, profit before tax was only VND 302 billion compared to VND 329 billion and profit after tax reached VND 236 billion compared to VND 264 billion. The drop in profits was attributed in part to FRT’s continued provisioning of bad debt to the F-Friends installment sales program and Subsidy subsidized sales. By October 2019, FRT had to make a provision of VND 27 billion.
Let’s put a hypothesis, in the case that if FRT did not make a provision of VND 27 billion, the total profit in 10 months of this business would be equal to 2018 without growth, while revenue would be lower. increase.
The underlying reason for the low revenue growth and the drop in profits is also partly attributed to the saturation of the phone and ICT market that FRT is doing.
Secondly, the direction of acquiring Long Chau pharmaceutical chain and expanding development has not brought much revenue and profit for FRT. Partly because the network of drugstores in Long Chau is not large, only concentrated mainly in Ho Chi Minh City. According to FRT’s development plan, in 2019 Long Chau will increase to 70 stores and contribute 500 billion sales, accounting for 2.8% of total revenue; by 2020, “booming” will be more than 270 pharmacies, reaching VND 1,900 billion in revenue and accounting for only 9.3% of total revenue.
That said, the “retail pie” of the pharmaceutical retail market looks delicious, but in fact it is not as expected as the revenue per pharmacy cannot match the revenue of the phone supermarket. Meanwhile, Long Chau brand is only known in a narrow range, not yet gaining a significant market share.
Long Chau drugstore chain will have to resort to the formula “boat to the water” and vice versa. That is, together with the self-development that FRT has directed for Long Chau chain to create a brand that is more recognizable, attracts consumers more broadly, it also has to rely on people’s spending on medicines. increase over time (2020: USD 85 / person; 2025: USD 163 / person).
However, the SSI analysis has yet to address the “outside of the data” issues of FRT. These are the factors that have an important impact on the strategy, creativity, flexibility in the business of businesses that FRT is in need, while Mobile World has been and is deploying. satisfactory first step.
Firstly, looking at FRT’s activities, one can see many imprints of “female general” CEO Nguyen Bach Diep. The question is how to promote the strength and creativity of the whole system, especially the leading and mid-level leadership team with little guidance about the role of a leader board and Are the mid-level officials appropriately decentralized so that they can contribute to creativity as well as shoulder the burden of a saturated market?
The key role of an individual can only help promote development to a certain level and in the long term, there is always a need for a team of equal competence and enthusiasm.
Secondly, in an enterprise when the “female general” is good and left many imprints, it is also good to go together with the centralization that is too heavy and too tightly controlled from big to small, which will have a certain negative impact on working atmosphere as well as employee dedication.
While the mobile phone market has been saturated in the last two years, Mobile World despite the relatively good growth of Dien may Xanh compensated and has Bach Hoa Xanh preparing for a booming future. but still “pedal” to open up new categories from watches to eyeglasses. Looking at the business direction of the second largest mobile phone retail chain in the current context, we can hardly see the new features that bring quick revenue and profit offsets in the short term, while Long Chau chain still has wait…
With the current reality, FRT is difficult to achieve the set targets: In the period of 2016 – 2020, the growth will be 23.9% / year for revenue and 33.5% / year for profit after tax.
When the expectations of investors on FRT decline, the consequences will certainly be evident in the stock price of FRT in the market.