VietNamNet Bridge – In 2014, the government will drastically restructure state-owned enterprises (SOEs) and a series of large SOEs will perform initial public offerings (IPO) and listing.
At a conference of the Ministry of Transport (MoT) on January 9, Prime Minister Nguyen Tan Dung instructed to equitize all SOEs under the MoT, to bring them to the stock market, to reduce investment in non-core sectors and to re-arrange personnel at SOEs, especially the maritime, shipbuilding and aviation corporations.
Minister of Transport Dinh La Thang said that in 2014, the Ministry will basically complete the restructuring of its SOEs. Accordingly, 11 corporations will be equitized in 2014, including: the Transport Work Construction Corporations 1, 4, 5, 6, 8, the Thang Long Construction Corporation, the Waterways Construction Corporation, the Vietnam Automobile Industry Corporation (Vinamotor), the Waterway Transportation Corporation, the Transportation Design Consultancy Corporation and Vietnam Airlines.
Of these corporations, the IPO of Vietnam Airlines and Vinamotor are the most expected by domestic and foreign investors. Both corporations are being pushed for IPO by the MoT.
The national flag carrier, Vietnam Airlines, earned a pre-tax profit of VND533 billion ($25.3 million) in 2013, 34 percent more than the year’s target, despite difficulties in the world economy, according to the airline’s press release.
During the year, Vietnam Airlines earned a total revenue of VND72.6 trillion (USD3.4 billion), up 8.5% from the year’s plan.
In 2013, Vietnam faced many difficulties, such as lower demand and a depreciation of certain currencies, such as JPY and AUD against USD, affecting the firm’s revenues.
According to the airlines they conducted 114,000 safe flights, 2.9% higher than the target for the year, and transported 15 million passengers, beating their target by 8.5%. Occupancy rates were estimated to have been 79.5%, setting a record.
The global economic situation is forecast to be better in 2014, the company hopes for a boost in travel demand. According to the International Air Transport Association (IATA), the world aviation sector will continue growing in the next five years.
Early this year, the Prime Minister approved plans for equitization of the Hanoi Construction Corporation. This company will become a JSC, with a chartered capital of VND1.9 trillion. The IPO will be carried out in 2014, through the auction of 49.7423 million shares, representing 26.18 percent of the charter capital.
In 2014, the wave of foreign investors looking for investment opportunities in the textile and garment industry will be stronger than last year because after Vietnam joins the TPP and when the TPP agreement takes effect, textile and garment will be one of the industries with the biggest gains. It is estimated that this industry will bring about $30 billion of export revenues to Vietnam in 2020 and $55 billion in 2030.
This is a great opportunity for the Vietnam Textile and Garment Group (Vinatex) to conduct an IPO in the first quarter 2014. According Vinatex, garment exports in 2013 was estimated at $20.4 billion, of which exports to the U.S. increased by 14 percent, 9 percent for the EU, 20 percent for Japan and 43 percent for South Korea. In particular, this was the first year the industry exported apparel accessories worth more than $500 million.
On February 20, 2014, Viglacera Corporation, a ceramic building material producer, will issue 307 million shares worth VND10,000 (US$4.7) each in an IPO.
The IPO is part of an equitisation plan by Viglacera, which aims to become the top construction material manufacturer in the country.
Viglacera’s plan, which targets charter capital of VND3.07 trillion ($1.46 billion), has been approved by the Prime Minister.
Viglacera said that it will sell over 76.9 million shares, or 25.07 per cent of its charter capital, by auction at a starting price of VND10,300 (48 US cents) each.
Viglacera is among the leading companies in the construction industry in Vietnam, exporting more than $23 million of products to 40 countries and territories worldwide. The group focuses on manufacturing materials for the construction of industrial parks, urban and commercial areas, and houses.
Along with equitisation efforts, it plans to restructure its operations by selling off non-lucrative projects.
Going forward, Viglacera will focus on two core businesses, including building materials and real estate. It also estimates an average annual growth rate of between 10 per cent and 15 per cent.
According to Luyen Cong Minh, chairman of Viglacera, the company’s IPO will offer a buying opportunity for investors seeking long-term profits.
The company plans to list on the exchange at the end of one year from the IPO.
On February 21, over 7 million shares of the Bach Dang Construction Corporation will be offered at an IPO in the Hanoi Stock Exchange.
At the Ho Chi Minh City Stock Exchange, the IPO of the Irrigation Construction Corporation 4 will be held on February 18.
Besides the IPOs of big corporation, in 2014 the State Capital Investment Corporation (SCIC) will offer “big products.”
Under the restructuring scheme of SCIC to 2015, this year and next year SCIC will withdraw capital from 376 businesses, including many shares that attract the interest of investors such as BVH, FPT, BMP and PPC.
The Bank for Investment and Development of Vietnam (BIDV), stock code BID, is completing the final procedures to list its shares in the HCM City Stock Exchange in the first quarter 2014.
By late 2013, the Vietnam stock market had more than 700 listed companies, but its capitalization level was the lowest in Asia. Investors are willing to pour money in major commodities of high quality, but they still have to wait for the IPO of large state-owned enterprises in the field of telecommunications, energy, aviation, and drinks…