HSBC report contains PE errors

OOOPS!

According to a story in the local press, HSBC's recent report contains some errors, specifically in the PE ratios listed for several firms.

Here are some highlights from the news report (with a rather provocative title)

Foreign investors trigger stock market fall in April: HSBC

...
According to HSBC, after the P/E index reached 32 in April, foreign investors decided to sell shares out to make profit, which worried domestic investors, who then sold shares in big quantities, leading to the sharp fall of stocks prices.

The trading value at the HCM City Securities Trading Centre (HSTC) decreased from $63mil in March to $47mil in April. Foreign investors bought $345mil worth of shares in January, and $158mil in February. In March, they sold shares out on 14 out of the 22 transaction days of the month, while they bought $83mil worth of shares in April only.

HSBC said that the prices of blue chips prove to be relatively expensive for foreign investors. Moreover, foreign investors do not want to buy shares at this moment as they are still waiting for big corporations to list on the bourse. Shares of big corporations like Vietcombank, Incombank, MobiFone and Vinaphone are expected to be equitised and available on the bourse in the time to come.

HSBC has also given the P/E indexes of listing companies in Vietnam. However, the indexes of several companies have been found as being false.

The Saigon Securities Incorporated’s P/E index (SSI), for example, was 251.8, while Nguyen Duy Hung, Chairman of SSI, said that SSI’s P/E was only 25.2, according to the Hanoi Securities Trading Centre (HASTC).

The information about false figures stirred up the market as HSBC is a prestigious institution.

HSBC on May 14 had to announce the changes in its report, admitting the errors in calculating the P/E indexes of SSI and four other companies: Bao Viet (BVS), Vinare (VNR), the Petroleum Services and Drilling Company (PVD) and But Son Cement Joint Stock Company (BTS).

In a report announced in early May, the P/E indexes of the four companies are 59.1, 76.4, 108.7 and 6.2, respectively. In the new report, the information about the four companies’ P/E remains absent as HSBC still needs to get updated information.

HSBC’s representative has attributed the errors to the lack of source materials. He said that the changes in the P/E indexes of several companies did not affect other conclusions released in the report.

REVISED PE FIGURES

Ticker Company P/E
STB Sacombank 56.2
VNM Vinamilk 36.6
FPT FPT 53.8
PPC Pha Lai Thermo Power Plant n/a
ACB ACB 34.6
PVD PVDrilling n/a
SSI SSI 25.2
REE REE 27.6
ITA Tan Tao Industrial Zone Development Company 40.8
VSH Vinh Son-Song Hinh Hydropower Plant 29.5
SAM Sacom 33.1
BMI Bao Minh Insurance 72.2
GMD Gemadept 37.4
SJS Song Da Urban Development 45.2
KDC Southern Kinh Do 32.3
BVS Bao Viet Securities n/a
BTS But Son Cement n/a
BCC Bim Son Cement 42.7
VNR Vinare n/a

FULL STORY:
Foreign investors trigger stock market fall in April: HSBC

It is worth noting that there is a LOT of inconsistent and conflicting information about PE ratios circulating in Vietnam.

It is not uncommon to see different PE numbers from SSI and various brokers than from HoSTC (the "official" numbers).

There are some good and not so good reasons for this.

PE could be for the last full fiscal year, or trailing 4 quarters. They could be based on pro-forma or audited figures. They could even be altered by an analyst who has a different view of what the company's earnings really were (ie removing one-time or exceptional items etc etc.)

This is why in a real market such as the US, you will often find slightly different PE numbers from different sources.

In Vietnam, ALL PE numbers are unreliable a) because earnings themselves reports are unreliable, based on Vietnamese accounting, mostly unaudited etc b) because earnings updates often come late when they come at all c) different firms use different numbers and calculations to arrive at their PE and often fail to specify the period for which the PE is calculated ie TTM etc.

SSI is the last one who should be critical of anyone, as the numbers they put on their website are often the most unreliable of all!

Take an example from this story PVD has a PE of 108.7 according to the original HSBC report. According to SSI website it should be 323.62, while another broker gives it a PE of 115.

Not to mention that the information on the SSI website is clearly inaccurate or wrong since they use the same figures for both last year and trailing...

Last Year EPS 772.5
P/E Ratio 323.62
Trailing EPS 772.5
Trailing P/E 323.62

PVD

So sorry SSI, you are no one to criticize other people's figures and I refuse to believe your PE is 25 no matter what HaSTC may say on the matter...