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Finance market down, enterprises return to core business fields   2009-02-19 - TBKTSG

When the finance market was ‘scorching hot’ in 2006-2007, businesses rushed to jump into finance investments. Nowadays, as the market has fallen, they have realized that they need to gather strength in their key business fields.

The story of the Refrigeration Engineering Enterprise (REE) has always been cited as a typical example for the ‘overindulgence’ in financial investments. At its highest peak of operation in 2006-2007, REE was always considered a blue-chip in the stock market.

At the time, REE decided that it needed to jump into financial investments and that it needed to inject money
in the real estate sector as well, with ratios of 30% for refrigeration engineering, 30% for real estate and 40% for financial investments. REE’s securities company almost became operational in 2007 and the plan was only canceled after the protest by several members of the board of directors.

As the stock market has been falling down, REE has been incurring major losses from its financial investments. On February 9, 2009, the HCM City Stock Exchange decided to put REE’s shares under its control due to the minus profit of the enterprise in 2008.

Many enterprises, learning lessons from themselves and from other companies, have realized that they need to gather strength in their core business fields.

At the regular shareholders’ meeting of Minh Phu Seafood Joint Stock Company (MPC), held in mid-2008, the board of directors, realizing the problems in neglecting their core business fields, decided that Minh Phu will only focus on its main business.

The board of directors of MPC did not approve the project of making investment in a high-rise building project, but decided that MPC had to inject money in building the tra and basa fish processing workshop in Hau Giang province in 2008. The plan on establishing MPC’s finance company was also delayed, so that the company could focus on developing shrimp farming.

Other companies, though having not met financial difficulties, have also decided that they need to gather strength in their forte business fields.

Vincom group, which has been very successful with Vincom City twin tower, once planned to become a multi-field group with investments in many sectors.

With an aim to become a powerful financial group, a lot of subsidiaries of Vicom were born within a short time, including a securities company, fund management company and finance company.

At that time, Vincom’s leaders said that Vincom firmly believed that with its huge capital and big experience, the group would be successful in the investment field. Explaining the multi-field investments, they said that wise investors should not put all their eggs into one basket.

However, sources said recently that the plan to sett up Vincom’s insurance company has been delayed, while the PR Manager and a lot of employees of Vincom’s securities company have been dismissed. A question has been raised that if there will be any changes with the goal previously set by Vincom to become a financial group.

On January 17, 2009, Vincom sent a message to the public that investment in real estate will be the main business of the group in 2009. Le Khac Hiep, Chairman of Vincom, stressed that real estate investment remains the No. 1 advantage of the group.

Rumour has it that Vinamilk, is planning to sell their brewery to a foreign partner in the joint venture, SAB Miller. And a question has been raised from the public regarding if Vinamilk, a dairy producer, made a wrong decision when they injected money into a brewery.

Meanwhile, Vinamilk’s Deputy General Director Tran Bao Minh says that Vinamilk will release an official notice if the stake sale and purchase in the joint venture occurs.

With a population of 86 million, Minh believes that Vietnam’s market has great potential for the company to exploit. He said that the company will focus on its core business advantages in the time to come, while paying more attention to popular consumers.

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