IPOs set to spice up year end trading: analysts

November 03, 2017 | 11:00
The stock market will feature a series of initial public offerings (IPOs) by State-owned enterprises (SoEs), including mega corporations, this year-end.
The Dung Quat Refinery in Quang Ngai Province. - Photo BSR Company

Analysts say this is likely to attract cash flows and is an opportunity for investors to measure business growth for future investments.

According to the VNDirect Securities Corporation, the expected fourth quarter IPOs include big names like the PetroVietnam Power Corporation (PV Power), PetroVietnam Oil Corporation (PV Oil), Binh Son Refining and Petrochemical Company Limited (BSR), Vietnam Rubber Industry Group (VRG), and Vietnam Southern Food Corporation Limited (Vinafood 2).

In particular, BSR, owner of the Dung Quat Refinery, plans an IPO on November 7, 2017 with a reference price of VND14,600 (US$0.65) per share, putting up 5-6 per cent of total shares with the hope of selling a 49 per cent stake to a strategic partner in 2018.

While a specific date has not been announced, PV Oil is also expected to hold an IPO in the last two months of 2017. The company hopes to sell 20 per cent of its shares at a starting price of VND14,300 ($0.636) per share.

PV Oil has said it will sell 44.7 per cent of its shares to strategic partners and 0.2 per cent of shares to employees to reduce the level of State ownership from 100 per cent to 35.1 per cent.

Similarly, VRG’s IPO in the fourth quarter of 2017 would put on offer 13.14 per cent of its shares at a reference price of VND 13,000($0.57) per share. In order to reduce the State ownership to below 51 per cent, VRG will sell 11.9 per cent of shares to strategic partners and 1.24 per cent to employees.

PV Power also plans to sell 20 per cent of its shares in December 2017, at an expected starting price of VND14,329 ($0.637) per share, reducing State ownership to below 51 per cent.

As per the companies’ financial reports at the end of 2016, BSR has a charter capital of up to VND35 trillion ($1.5 billion), and is considered the largest company, in terms of chartered capital, to be equitised at the moment.

The other SOEs also come with large amounts of chartered capital, like PV Oil at VND10.8 trillion ($480 million) and PV Power at VND21.7 trillion ($965 million).

Over the past five years, IPOs by the Vietnam Airlines Corporation (ACV), Vietnam Textile and Garment Group (Vinatex), Vietnam Engine and Agricultural Machinery Corporation (VEAM), or Vietnam Pharmaceutical Corporation (Vinapharm), have achieved very impressive results.

Therefore, the upcoming IPOs are expected to attract an even larger number of investors.

Nonetheless, analysts also advise that investors make no hasty decisions in their choices, and that they keep an eye on divestment in areas like aviation, transportation, beverages, construction materials and pharmaceuticals.

It is also likely that in the fourth quarter, the listed market will welcome many large companies after the IPO. According to Bao Viet Securities Company (BVSC), the capitalisation of large companies often trigger high fluctuations in prices, so the market will be more difficult to predict in the last two months of the year.

BVSC’s picks of potential stock groups for the year end are oil and gas; banking which continue to deal with non-performing loans; pharmaceuticals which has a positive medium-term outlook; Information Technology; and real estate. It also advises investors to watch out for differences between enterprises in the same sector.


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