Unsustainable expansion
The Sao Thai Duong Investment Joint Stock Company Limited (SJF) was founded in 2012 with a chartered capital of VND 6 bn, and was initially meant to import and supply organic beauty products such as herbal and organic consumer products like Sakura and Ecoparadise, which are manufactured in developed markets. In 2014, SJF expanded its business and increased its capital to VND 250 bn to further invest in a sustainable agricultural and forestry production chain. By the end of 2014, SJF also invested in building an industrial pressed bamboo factory in Hoa Binh and Dien Bien Provinces to produce interior décor products and such consumer goods for export.
In early 2015, SJF tried to introduce some advanced microbiological technologies from Japan and Europe in the field of cultivation and animal husbandry, in order to find the most appropriate and effective technology for clean agricultural production in Vietnam. Also in 2015, SJF continued increasing its capital to VND 660 bn to further invest in two industrial pressed bamboo factories and clean agricultural production chains based on biotechnology Lactobacillus Fermentum (LBF). Simultaneously, SJF also successfully tested the application of Japanese "soft freezing" preservation technology for fruits such as oranges, lychees, and potatoes, to allow fresh taste of fruit to last for upto three months without using chemical preservatives.
In October 2016, SJF established the Sunstar Smart Research and Development Center, with participation of both domestic and foreign experts. The mission of Sunstar Smart was to research and develop new products that would be in great demand in the present and future, such as smart devices for household applications, and automated production in factories. In 2017, SJF started to implement a comprehensive cooperation with Lam Son Sugar Joint Stock Company (Lasuco) to set up high-tech agricultural production using Japanese technology, and to build an industrial bamboo factory with capacity of 100,000 cubic meters per year in Thanh Hoa Province.
Leaders offload shares
In 2016, SJF officially became a public company with capital of VND 660 bn, and moved towards transparency of operations and brand enhancement. By July 2017, SJF officially listed shares on HOSE and closed at a price of VND 13,900 per share. After a long period of trading at VND 13,000-14,000 per share, SJF unexpectedly had a strong increase wave in 2018. For a phase lasting nearly a month, SJF surpassed the peak of VND 28,000 per share at the trading session on 24 August 2018.
However, upon climbing this peak, SJF fell into a state of correction. At that time, many investors still thought that this was a normal phenomenon, as this stock had strongly rallied from VND 15,400 per share. Therefore, SJF is continuously bought by investors whenever it declines, especially after this stock receded below VND 20,000 per share, which occurred at the trading session on 7 September 2018. When it fell below VND 20,000 per share, SJF suddenly reversed and increased straight to VND 25,000 per share, at the session on 26 September 2018. The strong recovery of SJF made many investors rush to catch the bottom in the belief that VND 20,000 per share was the support level of this stock. However, after this recovery phase, SJF plunged to VND 2,910 per share, at the trading session on 12 June 1919. Actually, alternating plunging sessions are recovery sessions to entice investors to participate in catching the bottom.
It is worth mentioning that before SJF plummeted, its key business leaders quickly sold out a large amount of holding shares. For example, Mr. Nguyen Tri Thien, Chairman of the Board of Directors and Mr. Nguyen Xuan Nam, Deputy General Director sold their shares in the company. According to data, Mr. Nguyen Tri Thien sold 1.98 million shares during the period from 5 July to 3 August 2018, while Mr. Nguyen Xuan Nam sold 1.65 million shares from 30 July to 15 August 2018. After selling at a price near peak, the two men registered to buy a total of 6 million shares from 14 January to 12 February 2019. At this time, SJF dropped to only VND 5,000 per share.
Shareholders react harshly
The fact that the stock plunged without braking made SJF's 2019 annual shareholders meeting hotter than ever, with a series of questions from shareholders. However, SJF leaders dismissed all suspicion of price manipulation by internal shareholders. According to a representative of the SJF leaders, the price fluctuation was completely consistent with the supply and demand of the stock market. SJF has dropped sharply in recent years for many reasons, including the general decline of the market due to the US-China trade war at the beginning of 2018. In addition, the cause may stem from results of business operations that were not as good as expected. In addition, the business of agricultural products and fertilizers was not as good as planned, due to the impact of the pandemic, with slow demand for fertilizer and food consumption.
This announcement by SJF shocked many shareholders who reacted harshly. At the beginning of 2019, when SJF stock decreased by 80%, Mr. Nguyen Tri Thien had announced that the company and the manufacturing situation of the business was running normally and continued to remain stable. Accordingly, the after-tax profit for the third quarter of 2018 reached around VND 42 bn, with the whole year estimated at VND 50 bn. However, under pressure from shareholders, the SJF representative acknowledged that the stock price dropped by over 90%, and it is likely that some shareholders have pledged stocks to borrow money to invest in their own activities. Because of the burden of loan repayment, this group of shareholders cannot afford to pay back which made the banks sell the mortgage on the loans.
