Mar 17, 2013

Vietnam - Higher foreign ownership ratio will help IPO shares to be salable

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VietNamNet Bridge – Analysts have warned about the possible oversupply of shares when a series of equitized enterprises would make IPO. However, the oversupply would not occur, if foreign investors are allowed to hold more shares in Vietnamese businesses.

It is expected that seven state owned corporations would make initial public offering (IPO) in 2013 and list their shares on the bourse with the total listed share value of VND25 trillion.

The Vietnamese stock market has been warming up on the news about the government’s determination to speed up the equitization. However, a worry has been raised that if the stock market would suffer from the “indigestion” if a big amount of shares would be available at the market at the same time.

The IPOs of two corporations on March 5 and 6 were not successful. The shares of a corporation were unsalable, while the other corporation could sell only a half of the shares offered.

The Vietnam Livestock Corporation put 26,696,000 shares into auctions, while it could sell 13.531,300 shares, or 50.68 percent. The shares were sold at VND10,100 per share on average, which brought VND136.67 billion.

The Sugar Corporation No. 2 put 16,765,900 shares on sale, but only 775,600 shares, or 4.6 percent, were sold. With the average sale price of VND10,101 per share, the IPO brought VND7.83 billion only.

The noteworthy thing is that most of the buyers were individual investors, while institutional investors kept indifferent to the auctions.

Sources have said that the Sugar Corporation No. 1 would also make IPO in 2013.

The IPO of the national flag air carrier Vietnam Airlines would be the most attractive event of the year. The air carrier has been told by the Ministry of Transport to complete the equitization in the second half of 2013.

Under the 2012-2015 restructuring plan approved by the Prime Minister, Vietnam Airlines would make IPO with the state’s ownership ratio of 65-75 percent of the chartered capital (VND8,942 billion).

After the equitization, Vietnam Airlines would be a group with one holding company, nine dependent units and 26 subsidiaries. It will also withdraw all the capital it contributed to nine enterprises and Techcombank in 2012-2015.

Vietnam Airlines plans to put 383 million shares at the IPO in April 2013, hoping to earn $200 million, which means the average share price at VND10,920 per share.

Vinatex, the textile and garment group, has scheduled to make an IPO on July 1, 2013. It has been conducting negotiations to choose foreign strategic shareholders. Sources said some Japanese investors have expressed their interests in the group.

Viglacera, a glass and porcelain manufacturer has decided that its IPO would take place in September 2013 at the latest, where 20 percent of stakes would be offered to the public.

Meanwhile, Vinamotor would continue implementing the restructuring plan in 2013, while the equitization of the holding company would be completed in 2013.

Analysts keep optimistic about the stock market performance in 2013, though they witnessed a very difficult year 2012.

The stock prices dropped so dramatically in 2012 with the stocks of many enterprises sold at below the face value. However, despite the low prices, shares were still unsalable.

Besides the above said seven state owned general corporations, 20 other SOEs would also enter the bourse, including the two big guys, Sabeco and Habeco, the big brewery manufacturers. The two may be forced to list shares in 2013 after the 2.5 year delay.

Compiled by C. V

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