Kinh Do mulls sweeter listing deal

Kinh Do products are available in over 40,000 retail outlets around Vietnam

Kinh Do Corporation CEO Tran Le Nguyen said his company, which is set to list on the stock exchange later this year, would be selling five million new shares to raise funds for a new confectionery factory.
The share issue, which will be launched in May, targets both existing shareholders and outsiders, as well as distributors, material suppliers and foreign investors.
Kinh Do prefers share sales to foreign investors who will help better its management, he said, adding that his firm was in talks with some foreign firms at the moment.
A close source to the company told Vietnam Investment Review last week that UK-backed life insurer Prudential and the British management firm Dragon Capital will be vying to buy Kinh Do shares.
The Vietnam Opportunity Fund (VOF), managed by VinaCapital, invested $5 million in Kinh Do through a secondary purchase in January, becoming the first foreign investor involved in the country’s leading confectionery maker.
VOF is holding a 10 per cent stake in Kinh Do. This indicates VOF bought Kinh Do shares for around VND370,000 each against the face value of VND100,000.
Kinh Do now has a total equity capital of VND200 billion ($13 million). If the issue is successful, its capital will be increased to VND250 billion ($15.9 million).
The capital increase will enable it to finance a project to build a 13-hectare factory in the Vietnam-Singapore Industrial Park in Ho Chi Minh City’s neighbouring province of Binh Duong, the company’s CEO said.
Work on the project, which is estimated to cost VND100 billion ($6.3 million), will start in this year’s third quarter, he said. The capacity of the new factory has yet to be finalised.
Kinh Do is also preparing to list its shares on the local stock exchange some time this year. After that, it will merge with the bourse-listed North Kinh Do, which now has VND50 billion ($3.18 million) in chartered capital, with Kinh Do holding almost half of the shares.
Kinh Do is one of the largest and most successful branded food companies in Vietnam. It now has more than 150 distributors and 40,000 retail outlets throughout the country, together with over 25 bakeries in Ho Chi Minh City and Hanoi.
Its wide export market includes the US, France, Japan, Russia, Germany, Taiwan, Singapore, Malaysia, Cambodia, Laos and Thailand.
Retail Asia magazine selected Kinh Do to be among the top 500 retailers in the Asia Pacific in 2004.
Kinh Do, which employs 4,100 people, posted 2004 revenue of over $46 million and net profit of $5.1 million. It is looking to raise the figures to $55.4 million and $6 million, respectively, this year.
The company has started venturing into a new business form by establishing franchised Kinh Do Bakeries, with the first opening in Ho Chi Minh City’s Tan Binh District last week.
Kinh Do executives believe the new business model, which has long been followed by many multinationals including McDonald’s, Jollibee and even Vietnam’s Trung Nguyen Coffee, will help their company branch out to all parts of the country in the future.
The company is planning to open 100 new bakeries over the next three years, and such a vision means opportunities for other businesses hoping to operate franchised Kinh Do bakeries.
All franchised shops will benefit from sales promotion programmes launched by the parent firm.