Viet Capital Securities Joint Stock Company (VCSC – HSX: VCI) recorded VND580 billion in pre-tax profit and VND2,654 billion in owners’ equity, an increase of 2.2x from the beginning of the year.
For 9M 2017, VCSC's total revenue reached VND1,006 billion, up 69.36% YoY (9M 2016: VND594 billion) and achieved 91.87% of the FY plan. Total pre-tax profit reached VND580 billion, of which pre-tax profit due to revaluation of financial assets was VND104 billion.
In 9M 2017, following the adoption of the new accounting method, VCSC has conducted a revaluation of its financial assets at market value, in which VCSC recorded an increase in the value of its investment compare with initial investment capital of VND405 billion. For investments that are financial assets recognized through fair value through profit or loss (FVTPL), the additional value through revaluation under this market price method is recognized in the income statement, resulting in an increase of VND104 billion, for investments classified as available-for-sale financial assets (AFS), the additional value of VND301 billion through revaluation under market price method is recorded in owner’s equity without affecting the business results in the corresponding period.
One of the highlight events of Q3 2017 was VCSC's IPO and official listing on the Ho Chi Minh City Stock Exchange (stock ticker: VCI) in July 2017. The successful IPO and listing resulted in a substantial VND704 billion increase in equity capital. As of September 30, 2017, VCSC's equity capital reached VND2,654 billion, up 2.21x compare with December 31, 2016. Given the revaluation of investments based on market prices is recognized in profit or loss based on the market situation in the last three months of the year, we believe that the market outlook for the final three months of the year is still favorable and will have a positive impact on the business activities of the company.
Although the IPO and listing have not contributed much to VCSC’s business performance in Q3, they did help improve part of VCSC’s working capital, boosting investor confidence and creating more advantages for VCSC to raise capital and improve its competitiveness in the future. For FY2017, VCSC expects to achieve VND650 billions of pre-tax profit (excluding impacts from the revaluation in market price-based investments), exceeding by 18.2% the pretax profit plan approved by the General Meeting of Shareholders in case of successful IPO of VND550 billion.
All of VCSC's business segment recorded positive growth. Along with the market's improvement, brokerage revenue grew by 34% YoY. Revenue from Investment Banking continued to contribute significantly to revenue and profit growth of VCSC, mainly coming from M&A, advisory services, in which the highlight deals included offering shares with a value of VND12,374 billion or USD538 million (including issuance to increase chartered capital and offering shares to existing shareholders) and listing of Vietnam Prosperity Joint Stock Commercial Bank, advisory for the private placement of Phu Nhuan Jewelry Joint Stock Company with a trading value of VND989 billion (USD43 million), co-advisor for the public offering of Viglacera Corporation with value trading of VND1,955 billion (USD85 million), completing advisory for listing shares of VietJet Aviation Joint Stock Company, equitization advisory for No.1 Construction Corporation, etc. For margin lending activities, in order to mitigate risks and provide long-term and sustainable investment efficiency to investors, VCSC maintains a prudent view in supporting financial leverage for investors, through limiting the provision of margin lending to large-cap stocks of companies with good business fundamentals. In the short term, this policy may affect VCSC’s market share. However, in the long run, we believe that this policy promotes efficiency and sustainability for our customers and shareholders.