Listed auto retailers' shares suffer from low earnings

Low sales and a lack of extraordinary income from asset sales have brought listed automobile firms' stocks down and pushed investors to other targets.

 

TMT Motors Corporation (HoSE: TMT) and Hoang Huy Investment Services JSC (HoSE: HHS) both recorded lower profits and even losses after three quarters.

TMT Motors earned only VND92.5 million (US$4,000) of profit in the third quarter, down 99 per cent year-on-year, despite net revenue increasing by 75 per cent annually to VND257 billion.

According to TMT's board of directors, the costs of sales increased as higher material expenses hit the profit margin. In addition, the firm did not sell any of its assets in the past quarter, unlike last year, while expenditure for advertising, sales and management hiked.

After three quarters, the company recorded a loss of VND6.5 billion compared to a nine-month profit of VND8 billion in 2018. Its total revenue fell 6.3 per cent year on year to VND131.7 billion in the nine-month period.

TMT Motors shares ended Friday at VND5,490 each.

Hoang Huy Investment Services posted a year-on-year loss of 89 per cent in nine-month revenue, which was VND374.8 billion. Its profit dropped a third to VND109 billion in January-September.

Sales of trucks and trailers – the firm’s core division – hit VND109.6 billion in nine months, 29 per cent of its total revenue but the lowest amount in several years.

The company has rotated to investing in real estate with hopes that revenue from selling property would boost its earnings.

Its shares finished this week at VND3,040.

Shares of Hang Xanh Motors Service JSC (HoSE: HAX) have declined in recent weeks after news it would accept a takeover bid from the South Korean firm The Class Hyosung.

The South Korean company offered to purchase 51 per cent of Hang Xanh for at least VND45,000 per share. The Vietnamese firm wants VND50,000 per share.

Speculation about the deal boosted Hang Xanh shares up to VND23,250 per share. But its shares ended Friday at VND17,600 per share.

After nine months, the company earned VND3.63 trillion in total revenue, up 11 per cent year-on-year. But net profit fell 31 per cent to VND44 billion.

Based on earnings and potential business activities, BIDV Securities Co (BSC) has marked auto stocks “neutral” for the last quarter of 2019.

In 2020, BSC expected Vietnamese auto retailers would benefit from the cut of car import tax, which will fall to zero per cent and increase demand for car purchases.

In addition, the car industry is entering the last quarter of the year, also known as the sales season, which will raise auto firms’ earnings and lift shares, according to BSC.

According to the Vietnam Automobile Manufacturers’ Association, total auto sales in October exceeded 27,400 vehicles in October, down 3 per cent year on year.

After 10 months, more than 246,000 vehicles were sold, up 15 per cent from the same time last year.

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BSC 15,200 0 %
HAX 17,400 0 %
HHS 3,070 10 +0.33%
TMT 4,460 -260 -5.51%

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