Many newly listed shares during the last one-month have continuously dropped in prices. On November 26, price of TRA coded share of Traphaco Pharmaceutical and Medical Equipment Joint Stock Co decreased by the entire allowable 20% amplitude for the first time after being listed on Ho Chi Minh Stock Exchange (STC).
With the comparative price of 79,000 dong per share, TRA closed at 62,400 dong per share, slipping 15,500 dong each. Excepting HLA of Huu Lien A Chau Steel Joint Stock Co, most of the newly listed shares on STC, including PVF of PetroVietnam Finance Joint Stock Co, BAS of Basa Joint Stock Co, OPC of OPC Pharmaceutical Joint Stock Co, KSH of Ha Nam Minerals Joint Stock Corp all fell sharply just in the first trading day. Notably, KSH saw 11 consecutive decreases as from being listed.
From October 30 to November 26, OPC share price slipped over 66%, followed by KSH down 50%, PVF 47% while HLA prices fell by over 43% compared with the offering price of 30,000 dong/share, higher than the reduction of VN Index. In the period, the STC’s index only dropped by 7.37%.
Given explanation about the reduction in prices of new shares, Le Dat Chi—securities specialist said that the aforementioned companies offered too high comparative prices. On October 30, OPC was listed with 78,000 dong per share, P/E ratio of 29 times in the first nine months of 2008 while the average P/E ratio of listed shares of the same sector was only around 20 times. In addition, as compared with the pharmaceutical sector’s averages, the Price to Book Value (P/B) of OPC was much higher whereas its return on equity was too low.
When releasing the offering price, companies had calculated carefully with the help of the consulting firms. But from the time of sending the application until the official listing (it often takes 1-3 months), the stock market in general and share prices in particularl go through many changes. Fall in share prices will be lower if companies re -calculate the offering prices suitably instead of the initial price.
The sharp reduction in share prices of big companies (such as PVF) has pulled down VN Index and affected negatively the investors’ psychology, said one specialist.