VNG, the Vietnamese technology firm specializing in digital content, online entertainment, social working and e-commerce, now has a valuation of $2.77 billion.
VNG has sold 350,000 shares at the price of VND1.861 million per share. This means that the Singaporean investors valued the company at $2.77 billion, if considering the amount of shares issued, 34.5 million, and at $2.2 billion, if considering the amount of shares in circulation, which is 27 million.
The sky high price surprised analysts. VNG reported profit of VND347 billion in 2018, a very small figure compared with the profit of VND3.2 trillion reported by another large technology firm – FPT.
However, Nhip Cau Dau Tu commented that investors have every reason to do this. They value shares by predicting the profits to be made in the future.
In the OTC market, VNG shares are traded at hundreds of thousand of dong per share. The data on sanotc.com show that in 2010, investors believed that VNG shares deserved the high price of hundreds of thousand of VND.
|VNG now has charter capital of VND345 billion, but its undivided gross profits have reached VND4.968 trillion.|
The typical characteristic of technology firms is that they invent technologies which can change people’s lives, and therefore, can bring big profits to the firms. This is also the reason behind the sharp growth gained by Apple, Amazon, Alibaba and Tencent.
In the OTC market, VNG shares are traded at hundreds of thousand of dong per share. The data on sanotc.com show that in 2010, investors believed that VNG shares deserved the high price of hundreds of thousand of dong.
In 2017, VNG price once climbed to a record high VND800,000 per share.
In investors’ eyes, VNG is very attractive, because the profits retained at the company are now far higher than its charter capital.
VNG now has charter capital of VND345 billion, but its undivided gross profits have reached VND4.968 trillion. In 2018, the company’s profit dropped sharply to VND347 billion, but it was still higher than the charter capital. VNG’s EPS in 2018 was VND12,000 per share, with 27 million shares in circulation and 34.5 million shares issued.
Analysts pointed out that in Vietnam’s stock market, the number of shares with EPS higher than VND12,000 is very modest. Meanwhile, if calculating EPS based on VNG’s profit in 2017, the figure would be VND34,000.
With the transactions made last February, Singaporean investors did not mind the current difficulties VNG is facing, including the decrease in revenue from games, and they continue to be confident about the company’s prospects.
According to Huynh Minh Tuan, CEO of Bien An Toan, an asset management & consultancy firm, and Tran Thai Son from Rong Viet Securities, VNG has greater potential than FPT.
FPT’s core business field is software. Meanwhile, VNG, with its Zalo, is an entire ecosystem comprising business fields which bring high profits, such as media and games.
Tuan said e-wallets will gradually replace cash payments. By that time, VNG, with Zalo, would have big sources of revenue.