Mr. Le Hong Minh: ‘VNG shares do not reflect the true value’

During the annual meeting on June 6, some investors asked the leaders of VNG Group (stock code: VNZ) why the stock was gloomy while the business was in the leading group of technology industry.

VNG currently has about 30 million shares traded on the UPCoM market, but the average liquidity in the last 10 sessions is less than 1,000 shares. The closing price this weekend was 317,000 VND, about 13% lower than at the beginning of the year and down sharply from the record of nearly 1.5 million VND when it first went public.

Responding to shareholders, VNG Chairman Le Hong Minh said the current stock price does not reflect the full value of the business for many reasons. First, stock liquidity is often low because of the policy of not issuing more when it goes public in 2023. Therefore, the shareholder structure is still mainly organizations and long-term employees through the preferential issuance program (ESOP).

“When prices drop, these people do not want to sell, leading to low liquidity. When liquidity is low, it is more difficult to attract new investors,” Mr. Minh said.

The second reason, according to Mr. Minh, is that VNG’s leadership is very hesitant to make grand statements or promises to stimulate demand for shares. He still maintains a serious work perspective and creates good products for consumers, thereby improving financial indicators, instead of focusing on polishing stocks.

However, the head of the VNG Board of Directors also admitted that he had not done a good job in providing information about business activities to investors in the past. He committed to improving this in the coming time, and at the same time meeting the legal criteria to list shares on the official exchange (ie HoSE or HNX).

VNG this year estimates revenue to range from 12,500-13,500 billion VND, while pre-tax profit is 300-450 billion VND. This is the first time they have set a target of making a profit since listing on the stock exchange, and at the same time cutting the long-term loss from 2021. This year’s goal is on track when the company collected 2,785 billion VND and profit after tax of 125 billion VND in the first three months of the year.

VNG is not expected to pay dividends. According to the management, the undistributed profit of VND 558 billion will be retained for investment and product development activities.

Talking about the development strategy in the coming time, Mr. Minh said that artificial intelligence (AI) is having a great impact on VNG’s business decisions, surpassing both previous technology waves, the Internet boom in the early 2000s and smartphones in the early 2010s. VNG is raising ambitions to develop pure AI products, but this is not an immediate priority.

“The most important thing now is to bring AI into existing products and optimize operations,” Mr. Minh shared.

For example, with online games, AI shortens content creation time from weeks to hours and automates the game publishing process. Zalopay payment application uses AI for automatic customer care, reducing response time from 10 minutes to a few seconds, while increasing the efficiency of detecting unusual transactions to 60%.

According to Mr. Minh, in the AI ​​era, VNG does not develop products or applications to serve a specific customer base. Instead, they build a digital ecosystem including connectivity, payment, entertainment and artificial intelligence infrastructure. Company leaders self-assess this as an ecosystem that not many businesses in Southeast Asia own at the moment.