Some businesses have submitted complete and accurate information but late announcements, causing delays in valuation analysis when the data has not been updated in a timely manner, leading to data not being updated with market developments when there is data for valuation.
Second, the way of disclosing information is not yet comprehensive and systematic, the database of information on the industry and the market is still incomplete, making it difficult for investors to estimate parameters and assumptions in valuation. In stock valuation models, estimating industry and market parameters for valuation is extremely important, for example, the industry P/E index in the P/E stock valuation model; or the β parameter in the dividend discount or cash flow discount valuation model. Currently in Vietnam, the database on the industry and the market is incomplete, leading to the lack of common data for the whole market. Each securities company itself has different data, not unified, causing many stock valuation analysts to hesitate in choosing data, leading to difficulties in analyzing and valuing stocks.
Third, the activities of credit rating organizations in Vietnam are almost obscure, not showing an important role in increasing market transparency and creating trust for investors. In Vietnam today, there are at least 3 organizations that are said to provide credit rating services, namely the Credit Information Center of the State Bank of Vietnam (CIC), the Center for Enterprise Credit Assessment Science (CRC) and the Credit Information and Rating Company (C&R). However, according to their reports, the services provided by CIC and C&R are more like those of a credit information agency than a credit rating company. These two agencies provide information on company profiles (name, address, business lines, history, etc.).
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operating history, etc., and their own ratings. However, they do not provide standards for ratings. CRC has a credit rating service but has not yet officially put it into operation, so no rating reports have been found. Furthermore, the number of businesses registering for credit ratings is not large. With such a limited number and unclear role of credit rating organizations, the Vietnamese stock market does not have information transparency, and does not have objective assessment data on the performance of businesses to effectively support the analysis and valuation of stocks by managers, banks and domestic and foreign investors.
Fourth, the size of the stock market in Vietnam is still small in terms of the number of listed stocks as well as the types of securities, derivatives (including call options, put options, futures contracts, and forward contracts). The number of listed companies in Vietnam is not large enough to form many market baskets, leading to little basis for calculating beta coefficients, making it difficult to accurately apply the dividend discount model or cash flow discount model. In addition, the size of the Vietnamese stock market is still limited, leading to difficulties in comparing and contrasting companies in the market and in the same economic sector. In general, when the size of the Vietnamese stock market has not really developed, it is possible to estimate better parameters and apply more valuation methods, thereby better serving the analysis and valuation of stocks.
Fifth, the State has not made any breakthroughs in widely disseminating knowledge about securities and securities investment to investors. Although the State Securities Commission has opened securities training classes and agreed to allow a number of universities to open training classes and grant securities investment certificates, the number of such training centers is still not enough to meet the needs of many investors in the market. No
With the State's orientation to popularize knowledge, investors have difficulty in finding knowledge, accessing valuation models as well as other knowledge to serve the work of stock valuation analysis because not all investors have the conditions to be properly trained in securities and securities investment since they were still in school.
4. Difficulties arising from securities trading organizations
Market assessments and analysis reports of securities companies have a significant impact on investors' opinions and psychology in the stock market. A significant number of investors rely on analysis reports and market assessments of securities companies to make investment decisions, or to estimate parameters for their stock valuation. However, currently, the human resources for securities analysis of securities companies are limited in capacity and have not been trained in depth, leading to incorrect assessments of the market or incorrect assessments between securities companies, causing confusion for investors and making valuation difficult.
In addition, a current situation in securities companies is that in order to attract investors, securities companies compete to provide information. The more information a securities company provides to investors, the more customers it attracts. Because of quantity over quality, for the purpose of increasing profits, many securities companies have provided false information, attracting the attention of investors, causing investors to have wrong judgments about the market as well as businesses, leading to incorrect valuations.
5. Difficulties arising from investors themselves
For investors themselves have not equipped themselves with basic knowledge about stocks and the stock market. They consider investment
Stocks are like a gamble in which the winners are the lucky ones who choose good stocks. They participate in the stock market only based on emotions, investing with the crowd instead of analyzing and evaluating stocks to make their own investment decisions. The Vietnamese stock market has probably passed the time of "buying and winning" (typically in 2007), the situation of buying and selling according to "trends" has significantly affected the sustainability of the market. When amateur investors see stock prices skyrocketing, instead of analyzing and assessing the market, they buy large volumes, making the stock "virtual fever", regardless of whether the business's performance is good or bad. In such "virtual fever" periods, only professional investors who come first will reap the most profits, while those who come later will have to take on more risks than hope for profits. Thus, investors themselves have created a trend of investing according to the trend, making the role of stock analysis and valuation become blurred or even if there is analysis and valuation, it is not accurate because the value of the enterprise on the market does not reflect the real value of the enterprise, but is mainly governed by the supply-demand relationship on the stock market.
CHAPTER III: PROPOSE SOME SOLUTIONS TO IMPROVE THE ABILITY TO ANALYZE AND VALUATE GROWTH STOCKS
I. DEVELOPMENT PROSPECTS OF GROWING COMPANIES IN VIETNAM'S STOCK MARKET IN THE COMING TIME
Since 2001, Vietnam has had the most dynamic economy in Southeast Asia with an annual growth rate of 7-8%. Compared to other countries in the region, the Vietnamese stock market is still young, formed and developed in a very short time and has only attracted attention in the past 4 years, the level of development is only at a basic level.
Vietnam's total market capitalization to GDP is about 39%, quite low compared to other countries in the region (Thailand 68%, South Korea 94%, India 90%, Malaysia 154%). The number of securities trading accounts accounts for only about 0.03% of the population, and 1% of the population is concentrated in developed urban areas. This proves that the market's potential is still very large.
In the strategy for stock market development to 2010 and vision to 2020, some key issues are raised as follows;
* Increase market size:
- Capital scale :
In the project to develop Vietnam's capital market until 2010 and vision to 2020, the goal is to develop a diversified capital market to meet the capital mobilization and investment needs of the economy, making the stock market a key component, an important component.
importance of the Vietnamese financial market. By 2010, the stock market capitalization value reached 50% of the gross domestic product (GDP) and by 2020 reached 70% of GDP, developing equivalent to the markets of countries in the region.
- Increase the number of joint stock enterprises :
Enterprises listed on the stock market come from three sources: equitized state-owned enterprises, joint-stock companies and enterprises converted to joint-stock companies. Enterprises converting their operating forms include private enterprises and foreign-invested enterprises converted to joint-stock companies.
Equitized state-owned enterprises:
By the end of 2008, the country had restructured 5,414 enterprises out of a total of about 6,200 state-owned enterprises (SOEs). Of these, 3,836 enterprises and enterprise divisions were equitized (accounting for 70.8% of the total number of restructured enterprises). Notably, 71 important state corporations and economic groups will be equitized in the 2007-2010 period, specifically in 2007 there were 20 corporations and general companies; in 2008 there were 26, in 2009 there were 19 and in 2010 there were 06 corporations and general companies.
The Government continues to promote the program of equitization of enterprises, state-owned corporations, economic groups and state-owned commercial banks, linking equitization with listing on the stock market; expanding the issuance of new shares to mobilize capital on the market. For enterprises that have been equitized and meet the conditions, they must be listed; at the same time, continue to sell state capital in state-owned enterprises that do not need to hold controlling shares or do not need to hold shares. Transfer
Convert foreign invested enterprises into joint stock companies and list and trade on the stock market.
If a large number of the above sources are listed, it will increase the choice of investment opportunities and significantly improve market liquidity, while facilitating and attracting more domestic and foreign investment capital.
- Expand the network of intermediary institutions and market services .
The professionalism of Vietnam's stock market will be improved through the formation and development of investment organizations, the participation of major investment banks in the world, and the cooperation and support of market development of other countries...
In addition, intermediary institutions and market services such as securities companies, fund management companies, securities investment companies, etc. will be developed to form a credit rating market in Vietnam. Allow the establishment of qualified credit rating organizations in Vietnam and allow a number of reputable foreign credit rating organizations to operate in Vietnam. At the same time, implement the roadmap to open the door to foreign professional investors in the Vietnamese market according to the committed roadmap; allow Vietnam Social Security, postal savings, etc. to participate in investment in the capital market; encourage the establishment of foreign investment funds for long-term investment in the Vietnamese market.
* Perfecting the legal corridor
Gradually perfecting the legal corridor through the promulgation of the Securities Law effective from January 1, 2007, replacing Decree No.
144/2003; promulgating regulations to regulate the activities of securities companies, fund management companies; regulations on registration of public companies...
II. SOLUTIONS TO INCREASE THE EFFICIENCY OF GROWTH STOCKS VALUATION IN THE VIETNAMESE STOCK MARKET
1. Choose a pricing method
As we know, there are many different methods of business valuation. Each method has certain advantages and disadvantages and is suitable for some businesses with certain characteristics. Thus, to value a business most accurately, we must choose a number of appropriate valuation methods and combine those valuation methods to determine the value of the business to produce reliable results. The use of a combination of different valuation methods aims to limit the disadvantages of each method, ensuring a multi-dimensional approach to business valuation.
- For slow-growing companies and strong companies: Valuation should be done mainly by the dividend discount method or the cash flow discount method. In cases where there is sufficient information and data to perform valuation by the cash flow discount method, this method should be prioritized. As for businesses that use most of their profits to pay cash dividends to shareholders, the dividend discount method should be used. When valuing by one of the two methods above, for these businesses, we should use the P/E valuation method to check the results. When valuing by the P/E method, we should use the average P/E index of the industry, especially focusing on businesses with the same size, nature of operations and growth rate.