Investment & Finance

Once upon a time… nostalgia of first stocks

KSS - Glorious past a long gone dream

(ĐTTCO) - The Na Ri Hamico Mineral Joint Stock Company (KSS) became a familiar name with investors after it took the stock market by storm in early 2010. However, the glorious past is now a long gone dream that was quickly buried by difficulties within the industry, particularly concerning incidents related to the blunders of its business leaders.

The preferential investment policy in minerals helped KSS grow in scale.

The preferential investment policy in minerals helped KSS grow in scale.

Speculative stock

KSS is an offshoot of Son Trang Private Enterprise, a privately owned construction company. Previously, KSS specialized in the field of irrigation, civil construction works, and building of national and provincial roads. Since 2008, KSS expanded into mining and trading in minerals, starting from silic, limestone and then expanding to iron ore, placer gold, lead and zinc. Although KSS entered this field relatively late, it took advantage of preferential policies to attract investments and become the fasted growing company in Bac Kan Province.

From a private enterprise with an initial charter capital of only VND 11.5 bn, KSS rapidly raised capital from VND 25 bn to VND 241 bn. On 19 March 2014, KSS finished issuing shares to pay dividends and offer to the public with the successful issuance of 15.2 mn shares, and increase charter capital to VND 394.3 bn. Also in 2014, KSS successfully issued 1 mn convertible bonds with face value of VND 100,000 per bond, totaling VND 100 bn. On 4 April 2015, these bonds were converted into 10 million shares, raising the charter capital of KSS to VND 494.3 bn.

KSS officially listed around 49 million shares on HOSE since 2010, with a reference price of around VND 50,000 per share. At this price, KSS became the largest mineral stock code on both exchanges at that time, with a market capitalization of VND 590 bn. After the first trading session on 4 January 2010, KSS had a very exciting session and at the time this stock code reached VND 60,000 per share. KSS was also classified among group of mineral stocks favored by investors, with regular trading volume reaching around 1 million units. With high liquidity, KSS was also a stock that saw large fluctuations in the stock market and was classified as a typical speculative stock on HOSE.

Psychological shock

Despite a smooth start, KSS quickly fell into tragic times. KSS is currently trading on the OTC market at only VND 800 per share. There are two reasons for the decline of KSS. One is poor business conditions and the other concerns incidents embroiling senior management. The production and business activities of enterprises are no longer favorable because the State strengthens the management of activities of mineral exploration, mining, processing, use and export through Directive 02/CT-TTg.

From 1 July 2012, the regulation to stop the export of raw illmenite ore, iron ore, lead and zinc ore and concentrates, copper, chromite, manganese, apatite, and of not granting new licenses for placer titanium ore, placer gold, gold mines and closing of non-productive mines, greatly affected several such businesses. Besides the economic downturn, the decline in domestic demand for some minerals also affected the profits of these enterprises.

Before his arrest, Mr. Nguyen Van Dinh had sold about 1.9 mn shares of KSS worth around VND 6.2 bn at trading price of VND 3,100 to VND 3,300 per share.
If difficulties in production and business activities are just fleeting, incidents related to the leadership were a psychological shock to shareholders. In June 2015, the Investigation Security Agency under the Ministry of Public Security, coordinated with the Bac Kan Province Police department to search KSS headquarters, and arrest Mr. Nguyen Van Dinh, General Director, who was also the Board Chairman, and Ms. Ha Thi Thu Huyen, the Chief Accountant, on charges of falsifying seals of agencies and organizations. Shortly after that, HOSE announced putting KSS under special control from 11 June. According to HOSE, due to entire administrative records of the business being seized by investigating authorities, shareholders rights were affected.

Reverberating aftershocks

The decision to put stocks under special control of HOSE was only the starting point in the downfall of KSS shares. First, the 2015 business results of KSS showed negative and in July 2016, KSS was forced to delist from HOSE because the auditing company refused to comment on the financial statements of 2015. According to Thang Long Auditing and Valuation Company Ltd, as of 31 December 2014, KSS production and business expenses were VND 178.55 bn, lower than the stated balance of VND 179.99 bn. In addition, the audit firm could not determine the accuracy of the liabilities incurred until 1 January 2015. As a result, the auditing firm was unable to provide an audited opinion on the 2015 financial statements of KSS.

After leaving HOSE, KSS listed on UPCoM in 2016. However, the reappearance of KSS took place rather quietly, with just the decision to bring stocks into the Investors Warning Board. The climax came with the decision to suspend the transaction due to late announcement of reviewed semi-annual financial statements of 2018. After this decision, KSS is now almost lost on the stock market, and information about this business enterprise is no longer available and the company's website also not accessible.

Kim Giang

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