PV Power to launch IPO in January 2018

A power plant of the PetroVietnam Power Corporation (PV Power). The electricity producer will auction more than 468 million shares at the initial public offering (IPO) on January 31. - Photo vietnamfinance.vn

The shares will be listed on the Hà Nội Stock Exchange (HNX), the northern market regulator said in its Wednesday announcement.

The initial auction price for PV Power’s 20 per cent ownership is set at VNĐ14,400 (64 US cents) per share. PV Power expects to receive at least VNĐ6.74 trillion from the IPO, according to HNX.

The market capitalisation of PV Power at the share price of VNĐ14,400 is estimated at US$1.48 billion while its charter capital is projected at VNĐ23.4 trillion ($1.04 billion) after the equitisation process is completed.

According to HCM City Securities Corp (HSC), the IPO price is not cheap as the price-to-earnings per share (P/E) of PV Power for 2017 is estimated at 21 compared to the region’s average price-to-earnings (P/E) ratio of 15.46.

The HCM City-based brokerage firm said that despite the concern, the upcoming PV Power IPO would still be attractive due to the firm’s growth prospects and its leading role in Việt Nam’s electricity market, which is forecast to be the fastest-growing in the Southeast Asia region with annual power usage growth rate of 7.1 per cent in the period 2016-20.

PV Power will also sell 676 million shares or 29 per cent of its charter capital to strategic investors, which have not yet been addressed. The strategic investors are required to make profits in the last two years, have no accumulated loss, and hold on to PV Power shares for at least five years.

The Vietnam National Oil and Gas Group (PetroVietnam or PVN) will hold 51 per cent of PV Power’s capital on behalf of the Government after the power generator becomes a joint-stock company.

The State ownership in PV Power may lessen in 2019 onwards depending on how the company is able to restructure its loans and complete negotiations with debt holders.

PV Power was established in 2007 and it was fully-owned by PVN. The company operates one coal-based thermal power plant, three gas-used thermal power plants, and three hydropower plants. The annual production is more than 4,208 megawatts — equal to 10 per cent of the country’s total power output.

PV Power is forecast to record VNĐ31.5 trillion in net revenue for 2017, a yearly increase of 12 per cent, according to HSC. The company’s post-tax profit is projected to increase 25 per cent year on year to VNĐ1.9 trillion.

In the first nine months, HSC estimates PV Power posted VNĐ23.1 trillion and VNĐ1.66 trillion in net revenue and pre-tax profit.

Earlier IPOs for PV Oil

PetroVietnam Oil Corporation (PV Oil), another member of PVN, has announced its IPO will take place in the HCM Stock Exchange on January 25, 2018.

The company will offer nearly 207 million shares or a fifth of its charter capital for sale at a starting price of VNĐ13,400 per share.

At that price level, the company’s market capitalisation is VNĐ13.86 trillion while its post-equitisation charter capital is set at VNĐ10.34 trillion.

The company will trade its shares on the Unlisted Public Company Market (UPCoM) under the Hà Nội Stock Exchange within 90 days from the IPO.

PV Oil will also sell more than 462 million shares (44.72 per cent stake) to strategic investors. PVN will hold a 35.1 per cent ownership in the petrol dealer after the equitisation is completed.

It will organise two roadshows in HCM City and Hà Nội on January 11-12 to introduce its portfolio to potential investors.

PV Oil is seen as the second-largest petrol dealer in Việt Nam after Petrolimex with a 22 per cent market share. In 2016, the company posted VNĐ34 trillion in revenue and VNĐ530 billion in pre-tax profit.

In 2017, its revenue is estimated at VNĐ55.5 trillion and pre-tax profit is forecast at VNĐ520 billion, outstripping the full-year forecast by 63 per cent and 36 per cent in revenue and profit, respectively.

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