Petrolimex promises HOSE price no lower than $1.7

On March 29, 2017, at the meeting with investors before listing on the Ho Chi Minh City Stock Exchange (HOSE), despite not mentioning the exact price, Petrolimex’s representative said that the firm will try to ensure investors’ benefits.

Bui Ngoc Bao, chairman of Petrolimex, said that after being listed on HOSE, the firm’s value will depend on the market.

“As the firm’s managers, we will try to ensure our investors’ benefits, and the listed price will not be lower than the price offered for our strategic shareholder JX Nippon Oil & Energy Corporation (JX NOE),” said Bao and added that the initial offering price will be publicised after the announcement of the exact listing day.

“The reference price on the first trading session of Petrolimex will not be lower than the price of the stocks sold to JX NOE,” Bao said.

Previously, in 2016, Petrolimex issued 103.5 million shares to JX NOE in a private placement at the unit price of VND39.017 ($1.7).

Bao said that dividends for 2016 will be distributed after the listing in April 2017. At the next shareholders’ meeting in April 25, Petrolimex’s board of directors will submit to its shareholders a reasonable dividend distribution plan, offering an amount not lower than the dividend of 16 per cent in 2015.

When assessing the advantages as well as risks of Petrolimex’s core business, Bao said, “We have prepared for the fierce competition and potential risks in the petroleum industry. We are ready for a competitive market, including the participation of foreign investors in this sector.”

The leader of Petrolimex was confident that with its reputation and support from customers, as well as some changes to promote a more transparent corporate governance, Petrolimex will hold 48 to 50 per cent of the domestic market in the future.

Regarding the divestment from the insurance, finance, and banking lines, Bao said that the move is inevitable as it is the state’s requirement for firms with huge state capital like Petrolimex.

“The government allowed Petrolimex to gradually decrease its stakes in insurance, finance, and banking, but it does not have to completely divest. However, the firm will minimise the investment in high-risk fields, and focus on the retail sector, which has already been Petrolimex’s strength,” Bao said.

Regarding Petrolimex’s activities in foreign markets, Bao said that the firm intends to maintain activities in some of its traditional markets, such as Laos and Cambodia. In particular, after purchasing a US firm in Laos, Petrolimex has moved to the third rank, just behind two native companies. It will try to maintain its top position in Laos in the long term.

Additionally, Cambodia is also considered a potential market in the long term. Petrolimex Singapore will be developed strongly and Petrolimex will try to ensure its position in the regional market.

Established in 1956, Petrolimex is now the oldest and biggest petroleum importer and distributor in Vietnam, with approximately 50 per cent of market share. The firm had an IPO in 2011 with a chartered capital of VND10.7 trillion ($468 million). Then, Petrolimex sold about 103.5 million shares, an equivalent of 10 per cent of its stakes, to strategic investor JX NOE, the biggest Japanese petroleum retailer with 43 per cent of market share in Japan.

Petrolimex purchased about VND155 million of treasury stocks in 2016. The company’s current chartered capital is VND12.939 trillion ($567 million), which is equivalent to 1.29 billion shares. The Ministry of Industry and Trade is the biggest shareholder with 981.7 million shares (75.87 per cent of the total stakes). JX NOE, the strategic shareholder, holds 103.5 million shares (eight per cent) and the stocks are limited from being transferred within five years of purchasing. Treasury stocks account for 11.98 per cent.

Petrolimex plans to officially list its shares on HOSE in April 2017, six years after its IPO.

In 2016, Petrolimex the parent company reported a revenue of VND81.755 trillion ($3.58 billion) and a net profit of VND3.278 trillion ($144 million), a 59.5 per cent increase compared to 2015. This was an all-time record net profit for Petrolimex.

Bao said these positive results derive from two factors. Firstly, Petrolimex’s imports are from Korea. Thanks to the Free Trade Agreement between Vietnam and Korea taking effect since September 2016, the import duty on petroleum from Korea is lower than for other countries. Thus, Petrolimex managed to cut down on expenses.

Second, Petrolimex could further reduce its expenses because the foreign exchange rate fluctuations helped the company save VND589 billion ($25.8 million). The interest expenses also decreased by VND69 billion ($3 million), due to the stocks issued to JX NOE and the decreasing liabilities resulting from the declining price of imported petroleum.

In 2016, Petrolimex’s consolidated revenue was VND123.098 trillion ($5.39 billion) and net profit was VND5.165 trillion ($226 million), which was also the highest net profit since its establishment.

Notably, on the balance sheet, Petrolimex’s short term debts decreased from VND12.560 trillion ($550 million) in 2015 to VND6.775 trillion ($297 million) in 2016. Following the decreasing debts, its liabilities/owners’ equity ratio also decreased from 0.96 to 0.42.

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