Will RDP stock resurrect?

The current situation, coupled with numerous challenges, especially in the plastics industry, makes it difficult for RDP to recover.

Market Capitalization “Evaporates” Significantly

In early August, the VN-Index fell to 1,126 points, shedding over 25 points in a single session. The market's selling pressure came from numerous stocks, including RDP, whose market capitalization had shrunk to a tiny level, damaging investor confidence. RDP Chairman Hồ Đức Lam sold more than 1.173 million RDP shares to recuperate about VND 11.73 billion.

In an extra trading session on August 2, RDP shares sank to a low of VND 2,410 per share, less than the cost of an iced drink, with a total market value of just more than VND 118 billion. Except for a brief moment in October 2023 when RDP rose over par value, the stock has lost more than 80% of its value and 75% since the beginning of 2024.

RDP's low stock price has corresponded with its placement on the HoSE's warning list on May 27, 2021, due to cumulative losses as of December 31, 2020 (excluding a brief recovery period in 2022). However, the fallout of RDP's legal setback against Japanese partner Sojitz has made it especially difficult for the company to recover. This partner, who signed a strategic partnership with RDP in 2017 and agreed to purchase 5 million common shares, paid for shares worth over VND 174 billion at Rạng Đông Long An Plastic Joint Stock Company, but later sued for compensation due to "RDP's breach of certain obligations in meeting post-transfer conditions."

Ongoing Challenges

In terms of business performance, in the second quarter of 2024, RDP's parent company's shareholders suffered a post-tax loss of VND 60.6 billion, and accumulated losses amounted to VND 266.4 billion. The company's audited annual financial report for 2023 recorded a post-tax loss for the parent company's shareholders of VND 142.5 billion and accumulated losses of VND 205.7 billion.

By the end of 2023, RDP had three subsidiaries and two associated companies, with ambitions to become an international multi-sector plastics group, with plastics remaining its core focus. Looking at its prospects, plastics is still a sector with significant growth opportunities, as the demand for products depends not only on consumer spending but also on opportunities in various industries, technology, and GDP growth.

However, the plastics and plastic packaging industries face increasing pressures, primarily from consumers and the government, in terms of environmental and pollution concerns. Plastic items and packaging are widely utilized, resulting in a vast volume of plastic trash that decomposes slowly in nature, causing detrimental effects on human health, wildlife, and the environment, including land and seas, according to RDP's SWOT analysis.

Additionally, according to RDP, the plastics industry, despite its potential, also faces high competition, especially from foreign rivals and FDI enterprises in the domestic market.

With a financial outlook that is far from optimistic, RDP has been aggressively expanding and exploring markets to boost revenue, particularly in packaging, faux leather, and thin films; expanding export markets for medical products and faux leather; improving productivity, reducing production costs; and cutting operational expenses. However, the investment required for expanding technology and market presence will demand significant capital, posing a difficult challenge for RDP.