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Shares with abnormal increases during the nCoV epidemic

Friday 14, 02 2020
The global stock market is currently heavily influenced by the development of acute pneumonia due to the new strain of the corona virus (nCoV)
Shares with abnormal increases during the nCoV epidemic

The majority of the Top 10 shares with sharp increases in prices in the first trading sessions of 2020 consist of unpopular companies in the market, especially in the context of the worrying mentality caused by the globally widespread of the nCoV epidemic.

​​Top 10 shares with increasing prices in the first 8 sessions of 2020

Medical and mining shares increase strongly

With an increase of more than 88.2%, the DNM shares of the Danameco Medical Joint-Stock Company has been leading the market in terms of the price increasing speed ever since the first trading session after the Lunar New Year. Accordingly, the DNM shares have consecutively increased for 7 sessions, including 6 ceiling sessions, bring the prices from 8,500 to 16,000 VND per share.

Formerly known as the Quang Nam – Da Nang Medical Material Station and equitized in 2005, DNM is an enterprise producing and trading drugs, medical equipment, and materials related to chemicals and disinfecting services and environment treatment. Being advertised about the production capacity of medical supplies, including medical masks, is one of the important reasons explaining the rise of DNM shares recently, as the mask prices in the market being in chaos.

Despite having small chartered capital, DNM can also be considered an “extraordinary” stock when the business results soared in the past year. According to the financial report (unaudited) in the last quarter of 2019, the net revenue in 2019 of the company reached VND 356 billion, which is an increase of nearly 2.2 times over the same period, and its profit after tax reached VND 8.7 billion, which is an increase of more than 2.2 times. However, it should be noted that the value of receivables of this pharmaceutical enterprise in Da Nang also increased sharply by 49% over the same period, to VND 79,863 billion.

It is noteworthy that in the Top 10 stocks with a sharp increase in prices after the Lunar New Year, almost only DNM is operating in the health sector, the rest divides between many other areas.

For example, the mining sector has FLC Mining Investment and Asset Management Joint Stock Company (GAB stock code), SPI Mining Joint Stock Company; or the financial sector has Asia Pacific Investment Joint Stock Company (API code), BIDV securities company (BSI code) and many other industries such as Hai Phong Electricity and Water Machine Installation Company (DNC), Camimex Seafood (CMX), and Hai Phong Electromechanical Joint Stock Company (DHP).

Ranging between many industries, it can be seen that the sharp increase in stocks in the first trading sessions after the Tet holiday did not seem to be related to the information about Wuhan pneumonia.

In addition, it can be seen that the strongly increasing stocks listed are mostly on the Hanoi Stock Exchange, with small market capitalization, and there are even shares that are below par value such as MCF, BSI or some stocks that are being warned (like API). The most unusual thing is that SPI shares have the same price as a cup of "iced tea", reaching 1,000 dong/share.

This group also includes the GAB shares which belong to the "FLC" family. In addition to a 40% increase in the last 8 sessions, this stock has also risen sharply in previous sessions. From the beginning of the year until now, GAB is "restructuring" through activities of renaming, revising the company's charter, registering more business lines (renewable energy, asset management, tourism, real estate, air transport, ...), and it is expecting to increase capital by 552 billion from the offering of shares to existing shareholders.

The pharmaceutical shares in 2019 developed negatively

​Expecting positive signs

The global stock market is currently heavily influenced by the development of acute pneumonia due to the new strain of the corona virus (nCoV). Similar to other countries, Vietnam is also focusing all resources on the prevention of the disease. The health sector in the stock market is therefore considered positive by investors due to the increasing demand for drugs and medical supplies. However, the activities of other economic sectors are slowing down, bringing a common concern for Vietnam's stock market.

Mr. Phan Dung Khanh, a securities expert, commented that the “trendy” shares are now benefiting from the temporary situation, but in the long run, it will be difficult to be sustainable.

In fact, in the first trading sessions of the year, pharmaceutical shares with large market capitalization such as IMP, DHG also soared but have reverted back in recent sessions. For example, the market price of IMP (Imexpharm Joint Stock Company) only increased by 9.6% over 8 sessions at the beginning of the new year.

The Vietnam Drug Administration (DAV) estimated that the total value of the pharmaceutical industry would reach US $ 7.7 billion in 2021, cited by SSI. The securities firm also estimated that the market value would increase by 9-10% this year. "The pharmaceutical industry will continue to grow, due to an aging population, increased healthcare costs, increased coverage of health insurance and an increase in average life expectancy," the SSI report said.

However, according to SSI, pharmaceutical stocks have had positive movements thanks to market sentiment in the short term but in the long term, it is only at a "neutral" level. "We currently do not see any substantive change for pharmaceutical companies listed as a result of the nCoV epidemic, so our view remains neutral on this field for 2020," SSI report stated.

Another concern is that experts are worried about the competitiveness of domestic pharmaceutical companies being currently lower than that of foreign companies and especially being dependent on imported pharmaceutical raw materials (about 80%-90%). "Companies in the pharmaceutical industry may face rising raw material prices, as well as exchange rate risks," SSI said.

​>> SSI forecasts 9 industries negatively affected by the Corona epidemic

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Stock Market

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