VNA lulls shareholders with promises of long-term benefits

VNA's focus in 2017 will be on safety, stability, and sustainable development, as well as protecting the rights of shareholders

RELATED CONTENTS:
	Vietnam Airlines plans for stability
	Vietnam Airlines may open direct flights to US next year
	Vietnam Airlines completing petition for direct flight to US
	Vietnam Airlines launches huge 2017 flight sale
	Viet Nam Airlines partners with Japan’s ANA

Diversifying services

At the June 20 meeting, VNA’s board of directors and executive board satisfied shareholders by spending more than one hour, twice as long as expected, on answering a wide range of difficult questions involving production and business plans and how VNA will position itself in the intense rivalry among air carriers in Vietnam.

“VNA does not copy our competitors, we have our own strategy,” chairman Pham Ngoc Minh said when a shareholder compared VNA’s stocks (ticker HVN on HoSE) with other low-cost carriers.

“We are trying to reach the target of sustainable and stable development,” Minh said.

Accordingly, VNA’s business strategy is to improve itself and diversify its services to increase competitive advantages. In particular, VNA focuses on the high and medium-income segments, while other low-cost carriers like Jetstar Pacific focus on the lower-income segment.

“VNA is the national carrier. We have a responsibility to develop sustainably for our shareholders’ benefits, as well as contribute to the development of the Vietnamese economy, society, security, and defence, and enhance Vietnam’s position in the world,” Minh said.

Regarding the HVN stock price, Tran Thanh Hien, head of Finance and Accounting, said that after the equitisation, VNA hired consultancy agencies to price its stocks in accordance with international standards.

At the time, many organisations priced HVN at VND22,300 ($0.98) per share. In January 2017, once again, HVN was revaluated by a number of international financial institutions and was priced at VND28,000 ($1.23) per share.

Over the last month, HVN was floating about VND26,000-VND29,000 ($1.14-$1.28). This is a fitting price to a high-standard air carrier which has good profitability indicators, internal factors, and stable stock price.

“With the market price of about VND27,000 ($1.19) per share, VNA’s capitalisation value is about $1.4 billion. This is fairly high in comparison with Thai Airways, the biggest air carrier in Thailand ($1.17 billion), and Garuda, the flag-carrier of Indonesia ($0.67 billion),” Hien said.

Raising chartered capital

The 2017 annual shareholders’ meeting discussed and passed many documents, such as the report on production and business results in 2016 and the main targets of production and business in 2017, and the plan on raising the charted capital by selling stakes to existing shareholders.

In 2016, VNA reported record high production and business results. It had nearly 140,000 completely safe flights and handled more than 20.6 million passengers, up 13 and 21 per cent on-year, respectively. VNA’s pre-tax profit in 2016 was VND2.601 trillion ($114.4 million), 1.5 times as much as in 2015.

Regarding VNA’s 2016 financial results, the total after-tax profit of the parent company was VND1.737 trillion ($76.4 million) of the total, VND736.52 billion ($32.4 million) went for dividend distribution. It means that VNA’s shareholders would receive a cash dividend of VND600 (3 US cent) per share for the fiscal year 2016.

VNA’s shareholders approved the plan on issuing an additional 191,191,337 shares at the price of VND10,000 ($0.44) apiece for its existing shareholders, in accordance with their right to purchase additional shares in the company before the general public. The money collected from this plan will be spent on purchasing eight Boeing 787-9 aircrafts and ten Airbus 350 aircrafts in 2017-2019. This purchase plan has been approved by the prime minister.

Regarding the production and business plan in 2017 passed by the annual shareholders’ meeting, VNA targets to handle more than 22.5 million passengers and generate a consolidated revenue of VND87.9 trillion ($3.9 billion). Of the total, the parent company sets the goal of VND66.872 trillion ($2.9 billion) of revenue. The goal of consolidated pre-tax profit of the whole VNA is VND1.638 trillion ($72 million), and VND1.256 trillion ($55.3 million) of this is hoped to be generated by the parent company.

“VNA will focus on measures that ensure our safety, stability, and sustainable development, bring out better services for customers and protect the legal rights of shareholders,” Duong Tri Thanh, general director of VNA, said.