No immediate plans to pull capital from Bao Viet: SCIC

SCIC deputy general director Le Song Lai made the statement to reporters as a response to securities analyst recommendations that state shareholder should offload Bao Viet shares to help reduce its influence in the market.

From last year until January 21, BVH shares witnessed a sharp 400 per cent growth in price to stand at VND103,000 (US$5.28) per share. After 14 consecutive sessions of rallies, BVH rose to its ceiling price for six days.

Nguyen Minh Hai, a securities analyst with a Ha Noi-based securities company, said that it was clearly an unusual event for an insurance stock, especially when taken in comparison to its business earnings.

"The insurance industry is characterised by stability with no profit mutations," Hai said, adding that the abnormal behaviour of the stock had distorted the VN-Index.

Lai said that taking a long-term prospective, the volatility of the stock price wouldn't affect the SCIC investment. But in short-term, it could be an opportunity to earn profits.

There are certain strategic fields in which the State has traditionally held shares, but the insurance industry wasn't one of them so a SCIC decision to sell their shares would not be problematic, he said.

But Bao Viet Chairman Le Quang Binh said that major shareholders always pledged not to sell their shares within a five-year period, a pledge which aimed to ensure their commitment to the company's corporate performance.

As a result, SCIC could only withdraw capital from Bao Viet in 2012 as Bao Viet had launched its IPO in 2007, Lai said, adding that while BVH stock prices were rising strongly, the sale of shares by the state shareholder to make state capital surpluses and reduce the heat of the stock price would not happen.

Binh said that corporate earnings were still good despite the sharp increase in share price.

In 2010, BVH earned a revenue of VND12.9 trillion ($614.3 million) and a pre-tax profit of VND1.3 trillion ($61.9 million). The group this year has targeted a total revenue of VND14.8 trillion ($704.8 million) and a pre-tax profit of VND1.5 trillion.