Haiphong Port IPO offers poor return

Vinalines’ Haiphong Port IPO suffered due to the turmoil gripping the country’s stock market

In the initial public offering (IPO) last week for the Vietnam National Shipping Lines (Vinalines) owned Haiphong Port, just 17.699 million of the 37.635 million registered shares available were successfully sold.

This amounts to 5.41 per cent of the port’s total shares compared to the initial target of 11.51 per cent. The total value of sold shares reached VND238 billion at an average selling price of VND13,507 per share. The highest bidding price reached VND17,000 per share. The auction saw the participation of just one institution and 77 individual investors.

“The disappointing results for the Hai Phong Port IPO probably don’t come as much of a surprise given the current turmoil in the domestic stock markets,” the Ho Chi Minh Securities Company (HSC) commented in its newsletter to clients last week.

Post-IPO, the port’s expected chartered capital should reach VND3,269 billion ($172 million).

Haiphong Port is now the biggest port in the northern region, accounting for 40 per cent of cargo volumes carried through Haiphong’s waterway network. In 2013, the company posted consolidated net revenues of VND1,939 billion ($92.3 million), up by 0.7 per cent year-on-year and net profits of VND288 billion ($13.7 million), up by 73 per cent on-year.

According to the Vinalines restructuring plan for the 2012-2015 period, the corporation will sell 25 per cent of the state stake in the port.

Meanwhile, Vietinbank  has requested that Vinalines seek approval from the Ministry of Transport to allow them to become a strategic partner of Vinalines’ port members once equitisation is complete.

Via a debt-equity swap with the ownership portion and swap ratio for each outstanding loan to be agreed via negotiation.

Vietinbank’s total outstanding loans to Vinalines and its related entities amount to VND4,982 billion ($237 million), equivalent to 1.3 per cent of the bank’s total loan book, of which loans to Vinalines total VND2,051 billion ($97.6 million) and subsidiaries and associates are valued at VND2,931 billion ($139 million).

According to Haiphong Port’s IPO document, it currently holds a 35-40 per cent market share in the Haiphong area with revenue mainly derived from cargo handling (74.5 per cent); storage and warehousing (13 per cent) and other services (12.5 per cent).

 This year, the parent company is targeting net revenues of VND1.4 trillion ($66.6 million), up 3 per cent year-on-year and net profits of VND178 billion ($8.47 million), down by 7.3 per cent year-on-year, while consolidated net profits are set at VND215 billion ($10.2 million), down by 25 per cent. This would generate a forward EPS of VND658 ($0.031) and a forward PE of 20.5xs.