PVGas throwing off IPO concerns

PetroVietnam Gas Corporation (PVGas) plans to auction 95 million shares, or 5 per cent of its equity, on the Ho Chi Minh Stock Exchange (HoSE) to raise its charter capital to VND18,950 billion ($997 million) with the floor price of VND31,000 per share.

“The initial public offering (IPO) is expected to take place next month and definitely in this fourth quarter,” said Dinh La Thang, chairman of PetroVietnam.

PVGas, one of the three leading affiliates of  state-owned oil giant PetroVietnam, supplies fuel to produce 40 per cent of the nation’s electricity output, 30 per cent of its fertiliser and meets over 70 per cent of liquefied petroleum gas (LPG) demand nationwide.

Speaking at the roadshow on PVGas’ upcoming IPO, stock market investor Dang Dinh Hiep said the dividend per share of VND1,000 PVGas gave for 2011 was low and not a golden opportunity for investors because the minimum dividend should be VND1,200, equivalent to savings interest rates.

“In addition, the floor IPO price of VND31,000 is relatively high compared to the VN-Index of around 440 points so what is this price level based on?” Hiep asked.

Answering Hiep’s question, To Hai, general director of Viet Capital Securities, which  is consulting on the IPO, said PVGas’ earnings per share was equivalent to other stocks, even  to Vinamilk with the 30 per cent dividend considered high. Vinamilk is a top bluechip  and the second largest market cap firm on the HoSE

“The current price and dividend of Vinamilk are VND90,000 and 30 per cent while the expected dividend of PVGas is 10 per cent of par value of VND10,000. If PVGas also pays a dividend of 30 per cent, the price must be much higher,” he said.

Hai claimed the floor IPO price of VND31,000 was not high because its price to earnings (P/E) ratio of 17.40 was equivalent to other regional stocks such as WPL AU Equity of 16.22 of Woodside Petroleum Limited, Australia’s second-largest oil and gas producer.

Meanwhile, deputy manager of PVGas’ Financial Department Chu Thi Trung said PVGas’ VND1,000 dividend was based on its financial structure in 2011. “In the next few years, PVGas plans to increase it assets by 2.5-fold.

Meanwhile, with the unstable financial situation, PVGas needs to guarantee effective usage of capital and profit to invest its projects and asset expansion in the future. If PVGas’ plan is successful, the given dividend will be definitely higher in the future,” Trung added.

PVGas estimated its revenue and net profit this year at $2.1 billion and $201.5 million, respectively.