Vietnam National Petroleum Group (Petrolimex, coded PLX), has witnessed a sharp drop in share prices after a vast wave of investors started selling its stocks and setting up stock discounts, following the drop in profitability since April 2017.

In the wake of Petrolimex's bad performance since April, shareholders went on an aggressive sales campaign

Prior to the falling business performance, the ticker stood at a record price of VND69,000 ($3.03) in September.

The current price of Petrolimex plunged to VND56,200 ($2.47), a roughly 20 per cent drop from the September record.

According to the group’s consolidated income statement for the first three quarters, the consolidated before-tax profit was only VND3.5 trillion ($156.13 million), which was 87.3 per cent of the same period in 2016 and 75.7 per cent of the target.

On the contrary, the consolidated revenue of the first three quarters was VND112.4 trillion ($4.95 billion), up 27.7 per cent against the same period in 2016.

Despite the burgeoning revenue growth in the first nine months, the company’s profit went on a steep downward slope.

Speaking about losing profitability, Petrolimex’s spokesperson clarified that the key elements negatively affecting the company’s petroleum trade were incurred costs, such as social insurance expenses and outsourcing services, as well as Korean import tariffs (which is lower than the existing applicable 10 per cent value-added tax on all imports and domestically-manufactured goods).

Besides, the petroleum business also encountered obstacles in other business lines, such as petroleum aviation and bitumen in road construction.

Many economists asserted that Petrolimex might be undergoing significant pressure to improve business performance. One of the group’s business enhancement strategies was to initiate the supply of the bio-fuel RON 92 E5 from the beginning of 2018.

Nguyen Quang Dung, deputy director general of Petrolimex, noted that the petroleum group put great maximum effort into assuring that 100 per cent of the group’s petrol stations would be capable of supplying E5 bio-fuel by January 1, 2018.

Dung also added that most of the petroleum input would be acquired from domestic bio-fuel plants that meet the company’s fuel quality requirements.

In addition, regarding business administration, the petroleum provider also applied the enterprise resources planning (ERP) and enterprise gas (Egas) with the intent of enhancing business performance in 2018.

Petrolimex is a Hanoi-based company founded in 1956. The petroleum provider primarily operates in the businesses of petroleum, transportation, gas, and petrochemicals. It also provides design and engineering, commercial, as well as insurance and banking services.

VIR