Brokerages on national stock exchanges will be rated according to newcriteria offering greater transparency, under a draft classificationproduced by the Ministry of Finance (MoF) and the State SecuritiesCommission (SSC).
According to the plan, companieswill be rated under the CAMEL criteria; assessing capital adequacy (C),asset quality (A), management quality (M), earnings (E) and liquidity(L).
Currently, investors only have access torankings for the top 10 companies on the two national stock exchanges,with no ratings assigned to the remaining 104 securities firms.
Each factor of the criteria accounts for a 20 percent weighting in the company's overall rating.
Companies with capital adequacy ratios (CAR) of 300 percent willreceive the highest rating of 100 points; while CARs ranging from 180 to300 percent will receive 80 points. Companies will lower CARs willreceive progressively lower ratings.
Kim LongSecurities (KLS), FPT Securities, Saigon Securities Inc (SSI) and HCMCity Securities (HCM) are among the companies expecting 100 ratings inthe CAR category.
First, receivables will beassessed to measure asset quality. Companies with total assets ratioless than 10 percent will receive 100 points, while a ratio of 75percent can expect a zero point rating.
The ratingwill prove a challenge for brokerages, with many top 10 companiespossessing a high proportion of high-margin loans and accountsreceivables at the 20-30 percent level. Smaller firms will also bepenalised, due to a high level of receivables comprising total assets.
Average revenue growth will reward stable growth butmay face challenges posed by market volatility and seasonal trendsaffecting business operations and stock value.
During the first six months of this year alone, total revenue ofsecurities-companies declined 30 percent over the same period last year.Notably, the top 10 brokerages all experienced falls in revenue due toslow share market growth and rising interest rates.
According to experts, brokerages will struggle to meet criteria onmanagement quality due to a churn in high-level management and stiffrequirements for company leaders to be working for at least 5 years toachieve a 100 point rating.
Additionally, a 100 point chairman is required to have at least 10 years of experience working in the sector.-VNA
According to the plan, companieswill be rated under the CAMEL criteria; assessing capital adequacy (C),asset quality (A), management quality (M), earnings (E) and liquidity(L).
Currently, investors only have access torankings for the top 10 companies on the two national stock exchanges,with no ratings assigned to the remaining 104 securities firms.
Each factor of the criteria accounts for a 20 percent weighting in the company's overall rating.
Companies with capital adequacy ratios (CAR) of 300 percent willreceive the highest rating of 100 points; while CARs ranging from 180 to300 percent will receive 80 points. Companies will lower CARs willreceive progressively lower ratings.
Kim LongSecurities (KLS), FPT Securities, Saigon Securities Inc (SSI) and HCMCity Securities (HCM) are among the companies expecting 100 ratings inthe CAR category.
First, receivables will beassessed to measure asset quality. Companies with total assets ratioless than 10 percent will receive 100 points, while a ratio of 75percent can expect a zero point rating.
The ratingwill prove a challenge for brokerages, with many top 10 companiespossessing a high proportion of high-margin loans and accountsreceivables at the 20-30 percent level. Smaller firms will also bepenalised, due to a high level of receivables comprising total assets.
Average revenue growth will reward stable growth butmay face challenges posed by market volatility and seasonal trendsaffecting business operations and stock value.
During the first six months of this year alone, total revenue ofsecurities-companies declined 30 percent over the same period last year.Notably, the top 10 brokerages all experienced falls in revenue due toslow share market growth and rising interest rates.
According to experts, brokerages will struggle to meet criteria onmanagement quality due to a churn in high-level management and stiffrequirements for company leaders to be working for at least 5 years toachieve a 100 point rating.
Additionally, a 100 point chairman is required to have at least 10 years of experience working in the sector.-VNA
