FPT shares are hot property

The France-based fund registered its intentions last week to buy FPT’s 1 million shares between September 21 and October 10. Its stake in FPT will be boosted to  6.02 per cent from its current 5.65 per cent if it fully succeeds in its purchase efforts.

The bid continues Red River Holding’s attempt since lately last year to boost ownership ratio in FPT. Since March, the foreign fund registered to buy one million shares in the company each month.

In the latest purchase, which took place from August 16 to September 14, the foreign fund had purchased 490,000 shares.

FPT is among a few Vietnamese companies that analysts recently recommended for investments amid  the market downturn, thanks to the stock’s relatively cheap price and long-term positive outlook.

Major securities house included Maybank Kim Eng Vietnam Securities, Saigon Securities Inc. (SSI), Ho Chi Minh City Securities (HSC)  all placed “buy” recommendations on the stock, even though FPT in late August disclosed  a downward revision of some 15 per cent of profit and revenue targets for 2012.

“We see the new target is quite achievable, if the situation does not become worse toward year end,” said SSI. “If FPT reaches the target, the stock is now traded at PE [price to earning] of only 6.2x, which is quite low.”

“In our opinion, lower-than-expected business results had already translated into 20 per cent decline of the stock price within past two months. FPT is now trading at PE [price to earnings] of 6.3x, lower than 12x of other companies of the same industry in the region,” said Maybank Kim Eng Vietnam Securities.

At the beginning of this year, Red River Holding owned about 5.2 per cent stake in FPT Corp. While room for foreigners in FPT Corp. is drying out, another foreign fund, Orchid Fund, is now the biggest shareholder of FPT Corp. with 10.66 per cent stake.  It is seemingly in a race to boost ownership in the local firm as well, making harder for Red River to execute its purchase plans.

HSC, in its update about FPT on August 31, had noticed that the evaporating room for foreign stakes  in FPT Corp. might make the stock less attractive.

“We reiterate our buy recommendation whilst bearing in mind that the foreign ownership is cur¬rently full. The stock has gone the same way as Vinamilk in terms of attracting a similar premium valuation from likely foreign buyers,” said the brokerage house.

Beside FPT Corp., Red River is also continuously acquiring shares in several other listing companies, mainly ones in producing sectors like bedding-goods producer Everpia Vietnam (EVE), Minh Phu Seafood Corp. (MPC), transportation services provider Vietnam Sun Corp. (VNS).