Officials arrested, auto firm may not be listed in 2019
The recent arrest of former directors at the Vietnam Engine and Agricultural Machinery Corporation (VEAM) has derailed the company’s future business plan.
VEAM is trading more than 1.3 billion shares on the Unlisted Public Company Market (UPCoM) with code VEA.
The company planned to switch its listing to the Ho Chi Minh Stock Exchange in 2019. The plan was approved at the firm’s annual shareholder meeting on June 30.
Since its UPCoM debut on July 2, 2018, VEAM shares gained 152 per cent to a peak of VND64,500 (US$2.77) per share on July 26.
Since then, the firm’s shares have been declining. The shares ended August 19 at VND49,300 per share, down 23.5 per cent from the previous peak.
The fall of VEAM shares has shown no signs of stopping and the major reason is the arrest of the company’s former leader in early August.
On August 3, the police arrested and prosecuted VEAM former general and vice general directors and two other officials for misuse and mismanagement of State assets, causing severe losses.
Inappropriate actions in the past had left VEAM with capital losses when former leaders decided to invest in a number of projects.
For example, the group lost VND331.8 billion when investing in a manufacturing facility in the northern province of Bac Kan between 2010 and June 2018. Those former leaders also exceeded the required capital invested in some associate and member units.
The biggest problem for investors now is the inventory of trucks, which was valued at VND1.2 trillion. Analysts have said it would not be easy to sell those trucks to recover some of the capital losses because the trucks were old and damaged; they also do not meet current environmental standards.
Though the corporation later announced the arrests would not harm its business and measures were being taken to stabilise the business operation in the future, investors have shown sign of worries with the current situation. Since July 26, VEAM shares were hit hard three times, falling between 4.8 per cent and 7.2 per cent on July 30, August 12 and August 13.
Investors were also concerned about the firm’s financial condition, which had been dragged down by the misuse of State capital in poor investments.
Financial problems are now also preventing the company from moving its shares from UPCoM to HoSE. In 2017 and 2018, the company failed to provide accurate financial statements to the market regulator.