Vietnam’s Stock-Market Mystery Stars Little-Known Construction Firm : Faros Construction’s market value has rocketed more than 10-fold to $2.2 billion in the past two months, becoming the seventh-biggest listed company in Vietnam. 
Vietnam may be one of Asia’s best-performing share markets this year, but the country’s standout stock is a previously little-known construction company whose worth has rocketed more than 10-fold in the past two months.

The market value of Faros Construction Corp., nearly 70%-owned by one of Vietnam’s richest men, has shot from $170 million at the time of its September initial public offering to $2.2 billion now, becoming the country’s seventh-biggest listed company. The trouble is, no one seems to understand why.

The company’s main business is building projects run by property developer FLC Group JSC, controlled by the same individual, Trinh Van Quyet. The sharp rise in Faros’s share price means it is now worth about $2 billion more than FLC itself, and has raised concern any fall back could trigger a widespread selloff in Vietnamese shares.

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For sure, Faros’s net profit is up 170% in the first nine months of this year, to 232.1 billion dong ($10.4 million). The company bought a large stock of land throughout Vietnam during a property-market downturn at low prices. Still, analysts say its performance doesn’t justify the company’s stock now being valued at more than 120 times its forecast earnings this year.

“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,” said Marc Djandji, head of institutional sales at Viet Dragon Securities Corp. in Ho Chi Minh City.

Faros lists few projects on its website that weren’t commissioned by FLC, and its brand name was largely unrecognized before its IPO. No other construction company in Vietnam has a market valuation anywhere near that of Faros nor has enjoyed similar recent price gains; Coteccons Construction JSC, the second-largest after Faros, is valued at $510 million.

Le Hai Tra, deputy general director of the Hochiminh Stock Exchange, said he has made a report flagging the “abnormal” move in Faros’s share price to Vietnam’s securities regulator. Mr. Le said he would soon request Faros to explain the share move.

Neither Faros nor executives at Vietnam’s securities regulator answered repeated calls for comment.

The company’s chairman said this week in a letter to shareholders that he expected Faros’s stock price to rise another 50% from last week’s closing, adding that the company is seeking shareholder approval to expand into other business areas including retailing, transport, power and telecommunications, and to issue more shares.

The unexplained surge in Faros’s stock is a reminder of the strange situations investors can find in frontier markets—those a notch less developed than emerging markets. The benchmark VN Index is up by more than 16% this year, although global investors were net sellers of $185 million of Vietnamese stocks in the first nine months. The global MSCI Frontier Markets Index is down 2.5% and the MSCI Emerging Markets Index is up 7.6% in the same period.

It is unclear who has been trading Faros shares in recent weeks. However, trading volume for Faros has been unusually high at around 2 million shares a day, compared with less than a million for Vietnam Dairy Products JSC, known as Vinamilk, widely considered one of Vietnam’s most coveted stocks.

Local institutional fund managers worry that a small group of investors could be pushing up the value of Faros. They say the aim could be to ensure that large exchange-traded funds, which investors use to passively invest in Vietnamese stocks, automatically buy shares in the company, further supporting its market price.

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Kevin Snowball, chief executive of PXP Vietnam Asset Management in Ho Chi Minh City, said that if Faros’s stock price falls as fast as it has risen, the losses could spark panic selling more broadly.

Faros’s owner Mr. Quyet made his fortune through FLC, of which he owns 17%, and which is developing several golf resorts and office buildings along Vietnam’s coastline.

Write to Jake Maxwell Watts at jake.watts@wsj.com and Vu Trong Khanh at Trong-Khanh.Vu@dowjones.com

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