ANNUAL REPORT 2010 SAIGON SECURITIES incorporation SSI

68 69 Headquarters: 72 Nguyen Hue, District 1, Hochiminh City Tel: +84 8 38242897 - Fax: +84 8 38242997 www.ssi.com.vn Designed and Produced by Aquarius SAIGON SECURITIES INCORPORATION (SSI) ANNUAL REPORT 2010 ANNUAL REPORT 2010 SAIGON SECURITIES INC.(SSI) 01 PERSONALIZED FINANCE MARKE INDUSTRY REVENUE DIVIDEN D DOMESTIC INSTITUTIONAL PRIVATE SHAREHOLDERS EMPLOYEES COMMUNITIES BROKERAGE CASH EQUITIES DERIVATIVES DIFFERENCIATING FUNDS PORTFOLIOS CONSULTING CAPITAL PERFORMANCE STANDARD EXPERTISE EXPERIENCE KNOWLEDGE PRACTICAL GENERATION PROFESSIONAL CHALLENGES TURMOIL SUCCESS COMMITMENT RELIABILITY CHANGE COMPETITION INSIGHT SUSTAINABILITY SUPERIOR PROACTIVE Chairman’s Message Development Milestones Key Business Units Financial Highlights Business Environment & Prospects Securities Services Investment Banking Asset Management Principal Investments & Treasury Research & Investment Advisory 02 06 08 10 12 24 28 32 36 38 Management Structure Information Technology Operations Human Resources Management Risk Management Corporate Responsibilities Audited Financial Reports Other Data Network Distribution 42 54 57 58 60 64 66 114 122 TABLE OF CONTENTS INVESTMENT BANKING COMMUNICATION EVOLUTION CORE VALUES Solutions-led: We are focused on the outcome of making our customers successful, and we prioritise their individual needs over existing products or processes. Skilled: We are experts in our industry and in our markets, and will continually enhance our professional skills to provide the highest standards of service to our customers. Inventive: We empower and encourage our people to find new creative ways to bring success to SSI and its customers. VISION PERSONALIZED FINANCE MARKE DOMESTIC FOREIGN INDIVIDUAL INSTITUTIONAL PRIVATE PRIVATE RETAIL EMPLOYEES COMMUNITIES ASSET MANAGEMENT CASH DERIVATIVES EQUITIZATION CONSULTING CAPITAL PERFORMANCE SKILL EXPERTISE EXPERIENCE KNOWLEDGE PRACTICAL CAPABILITY GENERATION TECHNOLOGY SUC SUC CESS CESS COMMITMENT CHANGE INSIGHT SUSTAINABILITY SUPERIOR INVESTMENT BANKING PROACTIVE The Business of Success SSI operates based on the vision “The Business of Success”. At the heart of all our products and services is a drive for making success happen. We help unlock opportunities in financial markets, and turn it into prosperity and growth. We put all our resources and ideas behind bringing success to our clients, our people, our shareholders and the communities we operate in. Connecting capital to opportunities SSI’s reason for existence is to connect capital to opportunities. This purpose unifies all businesses that come under the SSI brand, and will guide any future diversification that the brand may undertake. MISSION CAPITAL 02 03 CHAIRMAN’S MESSAGE Dear fellow shareholders, In the previous report, published at the beginning of 2010, we emphasized that despite Vietnam’s optimistic long term growth prospects, SSI had maintained its conservative view regarding the economy in the post-crisis era. The impact upon the economy from macroeconomic policies and the concern about a return of high inflation had called for prudence in the economy’s growth. As we expected, although the growth of GDP in 2010 reached 6.78%, which is higher than target, the challenges, resulting from inflation, exchange rate, interest rate levels as well as the return on investment capital, have remained. In 2010, the total capital raised through the stock market tripled, compared to that of 2009 but the concerns about macroeconomic policies, exchange rate and inflation have negatively influenced the performance of the stock market. VN-Index was closed at 484.66 points in the last trading session of the year, 2.04% decline YoY. The market liquidity shrunk by 1.1% compared to 2009, partly due to more conservative investment of foreign investors. In this difficult market environment, SSI did not achieve the business target set at the beginning of 2010, although the company maintained the best operating securities firm in the industry. Revenue in 2010 hit VND 1,503.4 billion, 34% higher than that of 2009 but 5% lower than target. Profit before tax reached VND 902.8 billion, 5.5% decline YoY and 25% lower than target. Although the 2010 business target was missed, we have achieved a lot; in particular: • SecuritiesServicescontinuedtoleadthemarketinthe foreign institution segment, acquiring 30% market share of trading value and returned to the top position for market share in Hochiminh Stock Exchange (HOSE) from June 2010. We continued to have the highest brokerage revenue in the market • InvestmentBankingachievedrecordhighrevenueofVND119 billion with 206 new contracts in 2010, and continues to lead the market. This result was partly due to the continuous effort in introducing new products and services • Despitethedifficultiesinraisingcapitalinthemarket,SSI Asset Management Company has successfully increased AUM by VND 760 billion, of which VND 360 billion was for the Member fund investing overseas. SSI’s Vision Fund (SSIVF) continues to be one of the safest domestic funds in 2010 • PrincipalInvestmentandTreasurybusinesshadalways performed with the safety and effectiveness principle, investing prudently in value stocks in defensive sectors whilst still capturing the market opportunities • ResearchreportsfromSSIResearchandInvestment Advisory continue to be highly regarded by our clients, especially foreign institutions in Vietnam. 2010 is the first year that the Research and Investment Advisory department has signed a long term advisory contract with Daiwa Vietnam Mother Growth Fund in Vietnam In November 2010, SSI has successfully organized the, “Gateway to Vietnam 2010”, conference, the annual event with the objective of connecting capital with investment opportunities. With the theme, “Driving growth through the private sector”, the conference attracted over 600 domestic and foreign investors and provided them with a comprehensive view regarding the potential of the market and the private economy. In 2010, SSI was amongst the Top 10 private companies who contributed the largest amounts of tax to the Government, and 2010 was also the year that SSI began to implement the plan to build permanent schools combined with places to shelter from storms and floods in Ha Tinh province, included in the, “leaves protecting tattered ones”, charity programme. 04 05 Chairman’s Message SSI perseveres with prudence in investment and value investment, to protect the benefits of investors and shareholders at the highest level Coming to the year of 2011, we recognise that the monetary tightening policy will continue to be promoted. However, the pressure on inflation has been occurring in the early days of the year. Therefore, we believe that there will be many difficulties in investment capital, inflation, interest and exchange rates in the business environment during 2011. Facing these economic forecasts, SSI perseveres with prudence in investment and value investment, to protect the benefits of investors and shareholders at the highest level. We also believe in the success of investing for the future and we are committed to continue the mission of connecting capital with investment opportunities and we are faithful to the mission of an advisor, a market-maker, a fund manager, a financial investment institution and a co-investor. We appreciate the contributions of all employees in the previous year with high dedication, creativeness and solidarity. We are grateful to our valued shareholders, clients and partners who have always supported SSI in the past years. And on behalf of all SSI’s staff members, I commit that SSI will gain improvements in performance in 2011 to continue to bring benefits to shareholders, clients and contribute to the development of the economy and the prosperity of society. My sincere thank you, Ho Chi Minh 15 March 2011 Chairman cum CEO NGUYEN DUY HUNG Being the transitional year following the year 2009 with the message of New Vision And Brand Expression , in 2010, SSI launched a new plan of, From Vision to Actions, as the preparation for the new development period of the Company. With the, “From Vision to Actions” plan, 2010 witnessed many significant reforms in SSI with the aim of achieving short-term and long-term goals. In the short-term, SSI had taken action with a lot of systematic solutions to maintain the leading position across all business lines. SSI had also provided customers with the most suitable products, services and solutions in accordance with the market situation; at the same time, the Company focused upon the in-depth investment activities in information technology infrastructure, operations, completing personnel organization systems, strengthening compliance control activities, risk-management mechanisms and improved the financial management level. In the long-term, SSI aims to continue developing its key strengths in the role of the leading financial intermediary institution in consultancy, brokerage, market-making and asset management. In particular, all SSI’s business units had fully accomplished in-depth procedures to be prepared for the new development period: • TheSecuritiesServiceswasdividedintotwobusinessunits of Institutional Brokerage and Retail Brokerage including the chain of all branches. The Research and Investment Advisory was merged into the Institutional Brokerage to strenghthen the No 1 position as Institutional Broker and at the same time, the Individual Research was set up to fulfil the increase in demand of the typical customers in this market segment • TheInvestmentBankinghadre-organisedthestructure and recruited new senior personnel in order to serve the needs of enterprise customers operating in basic fields of the economy and to diversify the products to suit the requirements of domestic and foreign investors, to strengthen and expand M&A advisory • SSIAssetManagementCompanyhadalsofocusedupon improving human resources and technology to satisfy the diverse needs of funds with different investment objectives and to prepare the infrastructure for mutual funds. In 2010, SSI had also made an important decision to gradually reduce proprietary activities and the entire investment portfolio would be partially and then fully transferred to the SSIAM to confirm the entirely transparent policy in all business activities when providing products or services to customers 06 07 1999-2000 2001 2002 2004 2005 2007 2008 2009 20102006 30/01/2009: Chartered capital reached VND 1,533,334,710,000 SSI was awarded the “Best Broker in Vietnam” and the “Best Equity House in Vietnam”. These awards were presented by the famous Finance Asia for the second consecutive year. 12/2009: The establishment of Nha Trang branch. 01/2008: The establishment of Hong Bang Transaction Office. SSI received the “Best Broker in Vietnam”, presented by the prestigious Finance Asia magazine. 03/03/2008: Chartered capital reached VND 1,199,998,710,000 16/04/2008: Chartered capital reached VND 1,366,666,710,000 05/2008: The establishment of Vung Tau branch. 02/2007: The establishment of Tran Binh Trong (Hanoi) branch. 04/2007: The establishment of Nguyen Cong Tru (Ho Chi Minh City) branch. 05/2007: The establishment of Hai Phong branch. 06/2007: The establishment of 3/2 Transaction Office. 07/2007: Chartered capital reached VND 799,999,170,000 03/08/2007: The establishment of SSIAM Co. Ltd. 29/10/2007: SSI was officially listed on Ho Chi Minh City Stock Exchange Center (now known as the Ho Chi Minh City Stock Exchange Department). 02/2006: Chartered capital reached VND 120,000,000,000 05/2006: Chartered capital reached VND 300,000,000,000 09/2006: Chartered capital reached VND 500,000,000,000 15/12/2006: SSI’s stock is listed on the Hanoi Stock Exchange Center. 02/2005: Chartered capital was raised to VND 26,000,000,000 5 main operations: investment advisory services, securities services, principal investment, securities depository and investment portfolio management. 06/2005: SSI raised chartered capital to VND 52,000,000,000 6 services inclusive of underwriting service. 04/2004: Chartered capital reached VND 23,000,000,000 09/07/2002: SSI 02/2001: Chartered capital reached VND 9,000,000,000 07/2001: Chartered 30/12/1999: SSI was founded. Its head office was based in Ho C hi Minh City with two main operations: Securities services and investment advisory. PERSONALIZED INDUST RY DIVIDEN D INDIVIDUAL PRI VATE SHAREHOLDERS EMPL COMMUNITIES BROKERAGE CASH EQUITIES DERIVATIVES FUNDS CONSULTING STANDARD SKILL KNOWLEDGE GENERA PROFESSIONAL TECHNOLOG CHALLENGES TURMOIL SUCCESS COMMITMENT RELIABILI TY CHANGE COMPE TITIO INSIGHT SUSTAINABILITY SUPERIOR 06 2002 6 services inclusive of underwriting service. 04/2004: Chartered capital reached VND 23,000,000,000 09/07/2002: SSI established its branch in Hanoi expanding its networks to Northern areas. 9,000,000,000 07/2001: Chartered capital was raised to VND 20,000,000,000 4 main operations as follows: investment advisory services, securities services, principal investment and securities depository. operations: Securities services and investment advisory. The initial chartered capital was VND 6,000,000,000 INDUST FUNDS DIVIDEN D BROKERA GE ARD PROFESSIONAL TURMOI C OMPE TITIO PERSONALIZED INDUSTRY DIVIDEND INDIVIDUAL EMPLOYEES COMMUNITIES BROKERAGE CASH EQUITIES DERIVATIVES DIFFERENCIATING FUNDS CONSULTING CAPITAL PERFORMANCE STANDARD SKILL KNOWLEDGE PROFESSIONAL TECHNOLOGY CHALLENGES TURMOIL SUCCESS COMMITMENT RELIABILITY COMPETITION INSIGHT SUSTAINABILITY SUPERIOR INDIVIDU AL BROKERA EQUITIES SKILL CHALLENGES SUC CESS OMMITMEN T RELIABILI DEVELOPMENT MILESTONES 01/2010: The establishment of Quang Ninh branch. SSI is in the list of the Top 10 companies contributing the highest amount of tax to the Government. SSI has been awarded the “Best Broker in Vietnam” and the “Best Equity House in Vietnam”. These awards were presented by Finance Asia for the third consecutive year. SSI is the first company to receive the “Best Investment Bank” in Vietnam prize. SSI Asset Management Ltd. (SSIAM) was honored to be the first asset management company to win the “Best Vietnam Onshore Fund House” presented by the Asian Investor. 03/03/2010: Chartered capital reached VND 1,755,558,710,000 18/05/2010: Chartered capital reached VND 3,511,117,420,000 09/2010: The establishment of My Dinh branch (Hanoi). 08 KEY BUSINESS UNITS SSI provides a variety of financial products and services to every type of institutional, individual, domestic and foreign customer: Basic products and services include securities accounts opening, Securities services, order trading services, cash transactions, securities depository, OTC transactions consultancy and support Financial corporate investment services and support for customers in securities trading were developed based upon the real demand of users and the Company’s risk management policy E-trading services which includes, Smart Trading, Web Trading, Contact Center and SMS effectively supporting clients with convenience and high speed Market summaries, business sector analysis, scrutiny of stock reports, on-site visits to companies and workshops on investment opportunities. Continuously improve the quality of basic products and services to better support and satisfy customers’ needs Continue research into customers’ demand, transaction history, the development of products and services in the market in order to create more efficient corporate financial investment services Remain the leader in effectively applying the latest technology in e-trading products and services, focusing upon the convenience, user friendliness, high speed, safety and efficiency for the clients Widening the portfolio of stocks for investment consultancy and researching and producing categorised analysis for individual customers. SSI provides a variety of financial advisory services, including: Corporate finance advisory: business evaluation, corporate financial restructuring, Mergers and Acquisitions (M&A), business dissolution and division, etc. Capital raising advisory in domestic and foreign capital markets, including equity capital market and debt capital market: equitisation IPO advisory, stock issuance advisory and underwriting (IPO and other issuances), stock listing advisory, corporate restructuring advisory and derivatives products. Focusing upon large scale companies with prestige and stable development in core sectors of the economy Diversifying services of capitals, debts, hybrid, structured to satisfy the demand of domestic and foreign investors Strengthening and expanding the M&A advisory, coordinating with international investment banking partners to best capture international M&A opportunities Concentrating upon human resources and the efficient development of supporting tools in order to improve the quality of SSI’s professional investment banking services that are adapted to meet international standards. SSIAM provides individual customers with a variety of asset management products and fund management services: Fund management includes middle and long term onshore and offshore fund management Portfolio management includes full and specific portfolio management services for institutional and individual, domestic and foreign customers Assets management for high-income clients Efficent value-added services for investors. Strengthen and develop successful factors to maintain competitive advantages to achieve goals Develop differentiated investment strategies to create additional Asset Management products and services in order to attract a greater number of domestic and foreign institutional clients Coordinating with Securities Services to market assets management products to individual customers with high value assets Preparing for the opportunities from Mutual Funds. Our research products includes: Company report: initiating company report, periodic and event-based company update report Market reports: focusing on the analysis of macroeconomics and the stock market for each day/week/month SSI 30 reports: analysing and forecasting the trend of the whole market by using an index calculated from the 30 largest companies in the market in terms of market capitalisation Sector Watch: a deeply analysed, objective opinion regarding the development of each sector which includes recommendation for institutional and individual clients when restructuring their investment portfolio Other reports such as Technical reports, Due Diligence reports and customised packages of reports. The Research and Investment Advisory department will be divided into two separate divisions to create the most suitable products for different customer groups, including: • ResearchandInvestmentadvisoryservicesforinstitutionalclients • ResearchandInvestmentadvisoryservicesforindividualcustomers Increasing the number of listed companies under coverage and launching a greater number new research products. KEY PRODUCTS/SERVICES DEVELOPMENT PLAN Securities Services Investment Banking SSI Asset Management (SSIAM) Research and Investment Advisory 09 10 11 FINANCIAL HIGHLIGHTS BUSINESS OPERATION RESULTS 2008 2009 2010 Net revenue (VND) 1,054,634,146,677 1,121,526,055,660 1,503,366,689,880 Net revenue gained from stock investment activities (VND) 308,952,319,713 881,789,621,544 899,895,527,639 Total profit before tax (VND) 277,819,245,792 955,711,514,448 902,819,486,257 Profit after tax (VND) 250,516,970,757 804,079,895,938 688,587,115,937 BALANCE SHEET 2008 2009 2010 Total assets (VND) 5,620,878,354,598 7,076,985,421,509 8,792,894,565,983 Chartered Capital (VND) 1,366,666,710,000 1,533,334,710,000 3,511,117,420,000 Weighted average of total stock in the market 134,740,180 153,322,201 350,711,972 Total equity (VND) 3,896,903,303,327 4,818,501,330,788 5,459,312,028,182 OTHERS 2008 2009 2010 Structure of assets Short-term assets/Total assets 50.39% 66.25% 72% Long-term assets/Total assets 49.61% 33.75% 28% Capital structure Total liabilities/Total assets 30.67% 31.48% 37% Total equity/Total assets 69.33% 68.52% 62% PROFIT RATIOS 2008 2009 2010 Profit after tax/Total assets (ROA) 4.46% 11.36% 7.80% Profit after tax/total equity (ROE) 6.43% 16.58% 12.60% Profit after tax/Chartered capital 18.33% 52.44% 19.6% Profit after tax/Net revenue 23.75% 71.70% 45.80% Earnings per share (EPS) (VND) 1,868 5,360 1,982 Profit after Tax Net Revenue (VND billion) (VND billion) Total AssetsChartered Capital (VND billion) Year Year Year Year (VND billion) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 1,600 1,400 1,200 1,000 800 600 400 200 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 1,000 900 800 700 600 500 400 300 200 100 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Notes: The above figures were calculated based upon SSI’s audited Financial report. 13 Business ENVIRONMENT & PROSPECTS & PROSPECTS & PROSPECTS& PROSPECTS 14 15 MACROECONOMICS GDP growth rate in 2010 reached 6.78%, higher than the year’s target of 6.5% and the growth rate in the second half of the year was much more positive than the same period last year. The industrial and services sector exhibited a good growth rate. Exports rose by 25.5% to USD 71.63 billions, higher than the 20.1% rise of imports to USD 84 billions. FDI disbursement stood at USD 11 billions, 10% higher than last year’s figure. Export turnover (except that of crude oil) continued to increase at high growth rate (26.8%) with half of the turnover being from goods with high and stable global demand such as rice, seafood and consumer staples. Domestic consumption posted a good growth rate (24.5%) thanks to the demand of the country’s young population. In 2010, Vietnam became a medium income country and demand for consumer goods and services is expected to increase rapidly in the coming years. Yet the economy still faces many challenges Besides the achievements, Vietnam’s economy still faces many challenges, reflected by the downgrade of Vietnam’s credibility with international organisations owing to issues related to inflation, foreign exchange reserve, country debt, balance of payment deficit, trade deficit… Expectations for a year of breakthrough growth rate in parallel with the recent recovery of the world economy did not happen but was substituted by the slow recovery and the economy’s intrinsic issues which revealed the inefficiency of state-owned enterprises, low return on invested capital and recurring inflation. Below are SSI’s Research & Investment Advisory’s views about several issues of the economy in 2010 Inflation not yet controlled Inflation seemed to be tame in the first 8 months of the year as the government held back the price increases of some utilities and imported inflation was moderate. However, beginning in September 2010, CPI inflation escalated, owing to the sharp rise in global commodity and food prices. Other causes included the pro-growth policy of the Government, some seasonal effects and the depreciation of the VND against USD, which itself weakened owing to the continued easing policies of the US Federal Reserve. For the whole year, CPI increased by 11.75%. Goods items with higher than 10% price increases included food and restaurant services (16.18%), housing and construction materials (15.74%) and education (19.38%), amongst which, food has the greatest impact owing to its predominant weight in the CPI basket. The figures show the Government’s strong measures to curb inflation towards the end of 2010 required more time to be effective. Policy shift from pro-growth to macro stability: Fiscal policy faces challenges Interest rate: As a result of the CPI spike since the end of Q3 2010, the Government shifted its policy from pro-growth to macro stability. The shift was appropriate but put a lot of challenges to fiscal policy. At the end of the year, high demand for funds and low liquidity in some of the small banks pushed up interest rates, especially in short-term maturity, to over 17.5% and even higher at some points. In addition to that, with the rise of the price of gold, people rushed to buy gold to fight inflation instead of saving, which impacted upon the liquidity of the banks. Interest rate competition pushed up interest rates even further, preventing enterprises from obtaining funds. As a result of regulatory pressures upon banks to increase charter capital, 2010 has overall, been a difficult year for their performance. The weak market sentiment and high interest rates have also negatively affected the real estate sector and has been preventing major expansion plans in many other industries. OVERVIEW ECONOMY IN 2010 Vietnam GDP growth rate in the second half of 2009 and 2010 YoY Grouwth Rate 2H2009 2H2010 GDP 4.92% 6.70% Agricultural sector 2.01% 2.85% Industrial and construction sector 4.71% 7.59% Services sector 6.37% 7.40% Source: GSO Vietnam economy in 2010 still maintained moderate growth rate. Source: GSO CPI movement 2000-2010 2006 20072007 2008 2008 20092009 2010 2010 2010 30% 25% 20% 15% 10% 5% 0% 12 12 12 12 12106 6 6 6 16 17 The aforementioned concerns had caused State bank of Vietnam (SBV) to initiate measures to support liquidity; notably the increased activities of the open market operation in the closing months of 2010 and the beginning of 2011. Exchange rate: VND was amongst the poorest performing currencies in the emerging markets during 2010, when most of the Asian currencies strengthened on the back of the declining USD. The adjustment, on two separate occasions, to the exchange rate were attempts to close the spread between the official exchange rate and the unofficial market rate, which was under pressure from the balance of payment deficit. The fluctuations in the exchange rate, in the unofficial market, reflected speculation in light of the continued high trade deficit and low impact of increased FDI disbursement on trade deficit as Vietnam had commenced investment abroad. Gold price and spiking CPI inflation also did not help the exchange rate. Besides, the error term in the balance of payment was striking, and caused investors, those without sufficient information, to assume trade deficit. Although the depreciation of the VND has continued to be a major boost for the export sector, it also causes a negative impact upon Vietnam foreign debt, both at government and enterprise level. VIETNAMESE STOCK MARKET PERFORMANCE IN 2010 The stock market has endured a year of many ups and downs 2010 was a year with many ups and downs in the Vietnamese Stock Market, affected by international and domestic economic situations. The truth is completely different from the optimistic forecasts of organisations and experts at the end of 2009. During 2010, the market price index stood still for a long period. At the end of the trading session on 31 December 2010, the VN-Index reached 484.66 points, a decrease of 2.04% over the same period in 2009. The lowest point of the VN-Index was set on 25 August 2010; however, this had increased about 80% in comparison to the lowest point of 2009 at 235.5 points. The peak of the Index was 549.51 points set on 6 May 2010, lower than the peak of 2009 at 624.10 points, decreased by 12%. For some periods during this year, the VN-Index did not reflect the real situation of the market when the increase of some blue-chips had retained the “green colour” of the market. Due to this fact, many investors tended to turn their attention to the HNX-Index when the Hanoi Stock Exchange (HNX) reflected more accurately the supply-demand relationship in the market. With the increase of the VN-Index trading sessions to 136 and the HNX-Index trading sessions to 117 (as at 31/12), total market transaction value at the end of 2010 was VND 620,312.3 billion, equivalent ot 20,578.5 million shares traded. 114,000 billion and included VND 83,000 billion from stock issues. The remainder was from bonds and other forms (1) . This fact is proof that the stock market has become the main capital raising channel for companies. Owing to the low liquidity in the capital market and high interest rates on deposits, most of the issued stocks in the market were focused upon existing stockholders with high discount rates, sometimes as high as 50%. There were many large IPOs in the market but they were not successful and did not attract many investors, such as: Da Nhim – Ham Thuan – Da Mi Hydropower Company, Vietnam Electric Equipment Cooperation, Vietnam Industrial Construction Cooperation, Hochiminh State Financial Investment Company, PV Gas… Treasury market was low in liquidity but witnessed many success Even though there were many difficulties in the market, the primary market has accomplished considerable achievements. The total of successfully issued state bonds (SB) reached the record of nearly VND 110,000 billion, the amount of companies’ bonds (CB) was more than VND 47,000 billion. At the same time, Vietnam has successfully issued USD 1 billion of treasury into the international market. Quality of the products in SB market was highly valued by the State Treasury, which accelerated the issue of bulk bonds with about 40 new bonds, in which there were many codes valued from VND 3,000 to 4,000 billion. The annual interest rates of Government bonds ranged from 10% to 12%. During the first six months of the year it was similar to bank deposit interest rates; for the last six months, it was relatively lower than bank interest rates. However, foreign investors did not pay much attention to the bond market and after 2009, they have not returned to the Vietnamese bond market owing to the uncertainty of the value of the VND in comparison to the USD. Strengthening corporate governance practices Since the establishment of the Enterprise Laws (2005) and the Security Laws (2007), 2010 would mark a significant development with the first criminal prosecution of insider trading in public stocks and in some high profile corruption indictments in the SOE sector. This indicates that the Government is quite serious regarding its objective of improving corporate governance amongst the country’s SOEs and public companies. SSI’s Research and Investment Advisory believes this is a good sign for the stock market and additional similar events will strengthen the confidence of both domestic and foreign investors in Vietnam. (1) According to Vietnam Investment Review, No. 04 (944) January 10th 2011 – “From July 01, IPO conditions would be more difficult” VN-Index Market_Val 01 2010 01 2010 03 2010 04 2010 05 2010 05 2010 06 2010 07 2010 08 2010 09 2010 10 2010 11 2010 12 2010 VND billion 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 VN-Index VN Index & Daily Trading Value 600 500 400 300 200 100 Overview Economy in 2010 Overnight interest rate (VNIBOR O/N) Source: Reuters 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 01/04/2010 02/04/2010 03/04/2010 04/04/2010 05/04/2010 06/04/2010 07/04/2010 08/04/2010 09/04/2010 10/04/2010 11/04/2010 12/04/2010 01/04/2011 02/04/2011 VND/USD 1-year NDF 24000.00 23000.00 22000.00 21000.00 20000.00 19000.00 18000.00 01/01/2010 02/01/2010 03/01/2010 04/01/2010 05/01/2010 06/01/2010 07/01/2010 08/01/2010 09/01/2010 10/01/2010 11/01/2010 12/01/2010 01/01/2011 02/01/2011 35% Deposit growth YTD Credit growth YTD 30% 25% 20% 15% 10% 5% 0% -5% 01 2010 02 2010 03 2010 04 2010 05 2010 06 2010 07 2010 08 2010 09 2010 10 2010 11 2010 12 2010 Deposit growth and Credit growth HOSE HNX Total of Hose & HNX VN-Index Volume of trading (mil. of shares) Value of trading (bil. VND) HNXIndex Volume of trading (mil. of shares) Value of trading (bil. VND) Volume of trading (mil. of shares) Value of trading (bil. VND) 2010 484.66 11,823.8 378,618.6 114.24 8,754.7 241,693.7 20,578.5 620,312.3 2009 494.77 11,057.87 429,672.10 168.17 5,759.83 197,356.91 16,817.7 627,029.01 Increase/ Decrease in 2010 compared to 2009 -2.04% -32.07% 22.4% -1.1% Even though there were many difficulties in the market during 2010, we still saw some remarkably positive points. Transactions of foreign investors revealed that they were continuously buying net. The total amount of net buying in 2010 reached VND 16,000 billion and was the main force behind the market. Liquidity was improved from October and there had been small waves to create beneficial opportunities for investors. The price decrease forced investors to make decisions based upon the basic criteria of investment; dispensing with the “gambling” criteria previously seen. The market portfolio was highly differentiated, creating opportunities for institutional investors to buy stocks and a greater number of new investors appeared, representing high value. For listed stocks, according to statistical figures, there were massive new listings of companies in 2010. Total new listed companies in Vietnam Stock Market reached 189 enterprises, with 113 companies on the HNX and 76 companies on HOSE. There were 92 new listed stocks on the UPCOM exchange. In view of the efficiency of raising capital through the stock market, the growth of capital raised in 2010, through that means was three times more than in 2009, reaching VND Current account balance 6.0 4.0 2.0 -2.0 -4.0 -6.0 -8.0 -10.0 -12.0 -14.0 0.0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 [...]... billion) 2007 2008 2009 2010 Source: SSI Audited Financial Reports from 2006 - 2010 prINCIpAL INvESTmENT Performance results Difficulties which occurred in the market during the year of 2010 created many effects on SSI s investment activities However, with a diversified and long-term investment strategy, SSI was able to eliminate a large amount of risk in 2010 Revenue from SSI s investment activities... management VND 30 billion 100% SSI Investment Member Fund (SSI IMF) Approval Letter of Member Fund Foundation No.130/TB-UBCK dated 27 July 2010 by State Securities Commission Investments in securities and other investible assets, inclusive of real estates Operating life is 31 years VND 360 billion 80% SSI International Corp (SSI IC) Register No, SRV 090813396-4724807 dated 27 August 2010 in Delaware, USA Foreign... December 2010 the Company has two (02) directly owned subsidiaries, which are SSI Asset Management Company Limited, SSI Investment Member Fund, and one (01) indirectly owned subsidiary namely SSI International Corp Chartered capital Company Name Established under Operating industry SSI Asset Management Company Ltd (SSIAM) Operating License No,19/UBCK- GP dated 3 August 2007 by State Securities Commission... consolidated financial statements 80 67 Report of the Board of Directors RepoRt oF tHe boaRD oF DiRectoRs The Board of Directors of Saigon Securities Incorporation (“the Company”) presents this report and the consolidated financial statements of the Company and its subsidiaries as at 31 December 2010 and for the year then ended ResUlts anD DiViDenDs Currency: VND Year 2010 Year 2009 Profit after tax for... investments in securities and other investible assets, including real estates In 2010, SSI Investment Member Fund committed to contribute USD 2,000,000 of capital into SSI International Corp., which makes the Fund the sole owner of SSI International Corp Accordingly, as at 31 December 2010, SSI International Corp is an 80% indirectly owned subsidiary of the Company The operating life of SSI International... not as positive as forecasted Our Securities Services was still able to maintain the market’s leading position with very steady steps The revenue for Securities Services business was VND 288 billion; an increase of 45% compared to 2009 This is the highest revenue of the division since the foundation of SSI SSI Securities Services’s Revenue for the period from 2006 -2010 350 288 300 255.85 250 197.19... year of 2011, a large proportion of investment portfolio will be entrusted to SSIAM for management in order to contribute to SSIAM’s new developing funds to diversify the investment risks as well as alter the transparency between SSI s investment and clients’ business activities TrEASury Performance results SSI, as a securities incorporation, manages the largest amount of owners’ capital contribution and... retail customers • We continuously improve our research reports such as macro reports, industry reports, company reports and daily and weekly newsletters, which are provided to both internal clients and external target clients The reports are highly appreciated especially by foreign institutional clients in Vietnam 39 Research and Investment Advisory SSI strives to continuously improve the product quality... policy and strategy, the strength of SSI s organisation is in both quantity and quality At the end of 2010, the total number of SSI s staff was 520 people, with 51% of female staff Many female employees were appointed to key leadership positions and have successfully accomplished their missions The average employee turnover is about 8% in 2010 proving the stability of SSI s personnel About 15% of employees... Headquarters and branches In 2010, the Internal control department cooperated with the Legal department to organise a number of discussion sessions to test the branch staff’s understanding of the company’s procedure The result from these discussion sessions was quite positive, enforcing compliance from staff with the internal procedure and rules, as well as relevant regulations SSI s internal control system . City Tel: +84 8 38242897 - Fax: +84 8 38242997 www .ssi. com.vn Designed and Produced by Aquarius SAIGON SECURITIES INCORPORATION (SSI) ANNUAL REPORT 2010 ANNUAL REPORT 2010 SAIGON SECURITIES INC. (SSI) 01 PERSONALIZED FINANCE MARKE INDUSTRY REVENUE DIVIDEN D DOMESTIC INSTITUTIONAL PRIVATE. more difficult” VN-Index Market_Val 01 2010 01 2010 03 2010 04 2010 05 2010 05 2010 06 2010 07 2010 08 2010 09 2010 10 2010 11 2010 12 2010 VND billion 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 VN-Index VN. 24000.00 23000.00 22000.00 21000.00 20000.00 19000.00 18000.00 01/01 /2010 02/01 /2010 03/01 /2010 04/01 /2010 05/01 /2010 06/01 /2010 07/01 /2010 08/01 /2010 09/01 /2010 10/01 /2010 11/01 /2010 12/01 /2010 01/01/2011 02/01/2011 35% Deposit growth YTD Credit growth YTD 30% 25% 20% 15% 10% 5% 0% -5% 01 2010 02 2010 03