A little known Vietnamese contractor has analysts around the world scratching their heads after its share price on the Ho Chi Minh stock exchange (HOSE) increased 13-fold in the past two months.
Faros Construction attracted $170m in share capital when it floated in September. But since then its price has risen to its present value of $2.2bn, making it Vietnam’s seventh biggest listed company.
The extraordinary rise has also made Vietnamese businessman Trinh Van Quyet (pictured), 70% owner of Faros, Vietnam’s second dollar-billionaire and the richest man on the HOSE.
The previous holder, and the country’s first billionaire, was Pham Nhat Vuong, chairman of property developer Vingroup.
Vietnam Bridge, a Vietnamese news service in English, reports that Faros Construction and its parent developer FLC Group have begun a number of large projects throughout the country, including the $250m Samson Beach and Golf Resort in Thanh Hoa province and the $330m Quy Nhon Beach and Golf Resort in Binh Dinh.
The total value of estate projects developed by FLC Group is estimated at more than $3bn by real estate company Savills, and the company hit its annual profit target of $53m in October, two months ahead of schedule.
Journalists playing a round at Faros Quy Nhon resort
However, commentators are unable to explain why the stock has increased at the rate it has, leading to speculation that it may have been manipulated by a cabal of investors.
Marc Djandji, head of institutional sales at Viet Dragon Securities in HCM City, told the Wall Street Journal: "I’ve been scratching my head over Faros for weeks. This company I had never heard of before September is now about 3.6% of the VN Index."
No other company in the country has a market valuation anywhere near the level achieved by Faros, and the situation is expected to become even more unusual: the company’s chairman wrote to shareholders last week to say he expected Faros’ price to rise another 50%.
He added that it was seeking shareholder approval to expand into other business areas, including retailing, transport, power and telecoms, and to issue more shares.
The hotel in the Faros’ Samson Beach and Golf Resort
Quyet (pictured) was born in 1975 in the northern province of Vinh Phuc. He started out as a lawyer and investment consultant before moving into commercial real estate. With tourism an important source of revenue in Vietnam, he wields considerable influence as owner of a large portfolio of big resorts and golf courses.
Tran Dac Sinh, former chairman of the HOSE, explained the company’s success to Vietnam Bridge by pointing to the quality of its product.
"When I came to Samson Beach & Golf Resort and Quy Nhon Beach & Golf Resort, these places were just the wilderness," he said. "Now they are massive and majestic projects. FLC Group focuses on sustainable investment, being environmentally friendly, creating jobs for thousands of workers, and beautifying landscapes. This is such a positive strategy that I highly appreciate."
Top image: Trinh Van Quyet, suddenly the richest man in Vietnam. Photo’s courtesy of FLC Group.